On 9 February, 2007 John Healey MP Financial Secretary to the Treasury announced that with effect from 1 April, 2007 the threshold for eligibility to the Cash Accounting Scheme for VAT will be more than doubled from the current £660,000 to £1.35million. He went on to announce that this change will 'allow more than 50,000 to significantly improve their cashflow'.

This is an important change for businesses that are eligible for the scheme in that they only have to account for VAT when they are paid by their customers. This can have enormous benefits for businesses whose customers are slow to pay them.

In opting to apply this scheme the business can also only recover VAT when it has paid for goods and services. However the benefit of not having to account for VAT on sales until the business is paid far outweighs this.