Choice of basis for trades: cash or accruals

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Choice of basis for trades: cash or accruals by Mind Map: Choice of basis for trades: cash or accruals

1. Certain unincorporated businesses can opt to use the cash basis

1.1. Turnover limit

1.1.1. Higher limit for universal credit claimants

1.2. Excluded businesses

1.3. Tick box on return

2. Other matters

2.1. Capital allowances

2.2. Trade losses

2.3. Post-cessation receipts

2.4. Interaction with CGT

2.5. NICs

2.6. Universal credits

2.7. Barristers and advocates

2.8. VAT

3. Transitional arrangements

3.1. Entering the cash basis

3.2. Leaving the cash basis

4. Accruals basis

4.1. Default option

4.2. Use generally accepted accounting practice (GAAP)

4.3. Record receipts and expenses applying to accounting period

4.4. Record stock, debtors and creditors

5. Cash basis provides simpler administration

5.1. Not as simple as taxing based on cash flow

6. Businesses using cash basis cannot benefit from certain tax rules