If you sell more on credit than you buy on credit, look at the VAT Cash Accounting Scheme. Normally you pay VAT on your sales whether or not your customer has paid you – but using this scheme means you do not need to pay VAT until the customer has paid. If the customer never pays, you never have to pay the VAT.
You can use cash accounting if your estimated turnover during the next tax year is not more than £1.35 million. If VAT cash accounting is not for you, VAT bad debt relief can be claimed if your customer has not paid you after six months.
