Lee Sharpe considers how the cash basis has developed and why HMRC is so keen on the cash basis for landlords, the self-employed and partnerships.
The cash basis for unincorporated trading entities was originally introduced by FA 2013 to apply from 2013/14 (FA 2013, Sch 4).
Initially:
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The focus was fundamentally on mainstream trading entities such as the self-employed and small partnerships (but not entities that involved companies).
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Only smaller businesses were eligible – the monetary test*, typically across an individual’s trading businesses in aggregate, tracked the VAT ‘12-month’ threshold (£79,000 in 2013/14) –
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The business’ (or businesses’) gross annual receipts had to be at or below that threshold to be able to join in the first place; while
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