Moneys received basis of accounting
There are two methods of accounting for Value-Added Tax (VAT):
- invoice basis for accounting
- money received basis of accounting.
The normal method is the invoice basis of accounting. Depending on your circumstances, you may have the option to account for VAT on the moneys received basis of accounting.
Under the invoice basis for accounting, a trader accounts for VAT when they issue the invoice to the customer. This is irrelevant of whether they receive payment from the customer at this time or not.
The money received basis is also known as the receipts basis or cash basis of accounting. Under this option, a trader accounts for VAT when payment is actually received from the customer.
See the Accounting for VAT on moneys received section for more information.