§ Over the past couple of years, I have also announced measures to allow traders to reclaim VAT on debts which remain unpaid after 12 months, and to encourage firms to take advantage of the cash accounting scheme under which traders only have to pay VAT to Customs when they themselves have been paid by their customers. I now intend to take this further in a way that will help many small businesses.
§ I propose to increase the ceiling on turnover below which firms may join the cash accounting scheme by £50,000 to £350,000. This will allow an extra 15,000 businesses to benefit, on top of the 400,000 that qualify already.
§ I also intend to help businesses which are too big to take advantage of the scheme. At present, VAT can be 190 reclaimed on any invoice which remains unpaid after 12 months. I propose to halve that qualifying period to six months.
§ These measures will give considerable help to companies, improving traders' cash flow by some £150 million in the year ahead.