Paid or unpaid?

I operate two separate VAT-registered businesses one of which is a limited company.

Occasionally customers (despite clear invoicing) make payments to the wrong business.

This usually means that a cheque has to be written from one business’s account to the other although when there are outstanding balances between the two the correction is sometimes done by set-off.

As I operate the cash accounting scheme for both businesses the timing of a receipt can often be sensitive – especially at the end of quarters.

When is a business treated as receiving payment?

Is it when I first receive the customer’s cheque (sent to the wrong business)?

Or is it some later time perhaps once the funds clear when I can then effect the transfer?

Query 17 337 – Cantona.

Reply by Neil Warren – author of Tolley’s VAT Planning 2008/09

The main benefit of the...