What paperwork do I need for the cash basis?
Generally, the cash basis only requires the kind of record-keeping you should already be doing. Keeping track of your sales, expenses and stock are all part of running a good business. The system's still quite a lot simpler and easier to get your head around, though.
Should I keep capital expenses records under the cash basis?
Usually, the things you buy for your business will just count as normal expenses. Just record what you spend and when you spend it. You won't normally have to bother with the tricky rules around capital allowances unless you're buying things like cars or motorcycles.
Do interest and finance costs count in the cash basis?
Interest on bank loans or other finance costs are allowed as expenses up to £500. If you're going to be paying more than that, then you might be better off looking into the accruals basis. As always, get advice from RIFT to find out what your best move is.
What happens if I make a loss using the cash basis?
If you've made a loss in a tax year, you can generally use it to count against your future business profits. This is called "carrying the loss forward". It's a good way of making sure you aren't punished for having a good year following a bad one. It doesn't work the other way round, though. You can't claim a reduction on last year's taxes just because you made a loss this year.
Self Assessment Enquiry
My business is VAT registered - Can I still use cash basis?
As long as you're under the cash basis entry threshold, you can still use it even if you're VAT registered. The threshold is the same as the one used for VAT, which is £83,000 in sales or turnover for 2016/17. If you go over the exit threshold later (£166,000 as of £2016/17), you'll have to leave the cash basis the following year.
If you're running more than one business, using the cash basis for one of them means using it for all of them. At this point, all your business' turnovers are added up to see if you hit the entry and exit thresholds.