A special scheme designed to help cash flow in small firms has been extended, it has been announced.
Financial Secretary to the Treasury, John Healey MP, announced that the Cash Accounting Scheme (CAS) will be extended from April 1 2007.
The 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.
As of April, the threshold for CAS is to be more than doubled from £660,000 to £1.35 million.
The news will be welcomed by many small firms that suffer financially at the hands of late payers.
A survey conducted by software company Mamut found that more than half of firms with fewer than 20 staff suffer from late payments, whereas only 29% of those with between 20 and 50 staff have similar problems.
Most of the estimated 750 businesses that currently fail on a daily basis in the UK are smaller firms, according to credit checkers at e-bcm, who argue that small businesses find it difficult to access the resources that enable large companies to reduce their risk or chase up debts.
Speaking at the Yorkshire Forward Conference in Bradford, Healey said:
“Doubling the threshold of the CAS will allow more than 50,000 businesses to significantly improve their cash flow. 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.”
© Crimson Business Ltd. 2007