Record payments based on supplier statements rather than invoices
Historically, businesses have been required to record every single purchase invoice – even if you pay your supplier based on their statements, covering many invoices.
The common example is a builder who buys trade supplies throughout the month, but pays based on the supplier statement.
VAT Notice 700/22, updated on the 5 May 2019, states that now, for businesses using cash accounting for VAT (where you pay and reclaim your VAT based on when money is paid/received rather than based on invoice dates) you can record a single entry based on your supplier statement - a massive time saver for those on cash accounting.
You will need to keep your invoices and total the VAT on those invoices. In your accounts you can then record the total paid to the supplier and the total VAT therein.
Note that you need to check all your invoices are at the same rate of VAT – if there is a split between standard and zero rated VAT you need to ensure you total the actual VAT charged correctly.
For businesses who trade with the same suppliers many times in the month, and who use cash accounting, this is a welcome update to the VAT regulations.
Petty cash expenses
VAT Notice 700/22 also updates the rules to state that petty cash expenses can be posted as a single total, as long as no individual receipt exceeds £50 and the total of all receipts does not exceed £500 per entry.
