Usually, the amount of VAT you pay HM Revenue and Customs (HMRC) is the difference between your sales invoices and purchase invoices. You have to report these figures and pay any money to HMRC even if the invoices haven’t been paid.
With the Cash Accounting Scheme you:
pay VAT on your sales when your customers pay you
reclaim VAT on your purchases when you have paid your supplier
To join the scheme your VAT taxable turnover must be £1.35 million or less.
Talk to an accountant or tax adviser (external link) if you want advice on whether the Cash Accounting Scheme is right for you.