From 1 April 2007 the turnover threshold for joining the scheme rose to £1.35m from £660,000, with the result that over 40 per cent of VAT-registered persons are eligible to use the cash accounting scheme (HMRC Press Release of 10 May 2007).

The main disadvantage of cash accounting is that input tax cannot be claimed until suppliers have been paid, but most persons have more output tax liabilities than input tax claims, so cash accounting is worthwhile for such persons. Naturally, the advantage of not paying output tax until payment is received is not worthwhile if too much of the income is zero‐rated.

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