A special scheme to help cashflow in small firms will be extended from 1 April 2007, Financial Secretary to the UK Treasury, John Healey announced on Friday.
The Cash Accounting Scheme (CAS) allows eligible businesses to defer paying their VAT until they have received payment from their customers, as opposed to accounting for and paying VAT when they issue and receive invoices.
From 1 April 2007, the threshold for CAS is to be more than doubled from GBP660,000 to GBP1.35 million. Changes to the VAT scheme will help small-to-medium-sized companies cope with cash flow difficulties.
Speaking at the Yorkshire Forward Conference in Bradford last week, Mr Healey explained that:
"Doubling the threshold of the Cash Accounting Scheme will allow more than 50,000 businesses to significantly improve their cashflow. We know that small businesses are the engine for the UK's economy, so it is only right that we look to improve the climate for them."
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