What is the Accruals Basis VAT?
The accruals basis VAT works differently from cash basis:
You pay VAT when you issue an invoice to your customers - even if payment hasn’t been received yet.
You reclaim VAT when you receive a supplier invoice - even if you haven’t paid it yet.
How does Float calculate VAT?
We take your cash-based budgets and shift them back to when the VAT liability would occur under accruals rules.
Here’s how it works:
We analyse transactional data from your accounting software.
For each account (e.g., Sales, Purchases), we calculate average payment terms, giving more weight to larger transactions.
Budgets are adjusted backwards by this average to estimate the invoice date, which determines the VAT period.
💡 Example:
If your Sales account averages 45-day payment terms and you have a £10,000 budget on 15th March, Float moves the VAT impact to 29th January.
Setting your VAT quarters (UK)
Float supports all three HMRC VAT quarter groupings. You can choose your quarter when setting up VAT or editing VAT settings.
Quarter Months | Return Due |
Mar, Jun, Sep, Dec | 7th of the second following month |
Apr, Jul, Oct, Jan | 7th of the second following month |
Feb, May, Aug, Nov | 7th of the second following month |
💡 If you file monthly, Float will automatically detect this from your accounting platform and set it as your default VAT frequency.
Forecasting Options
Float provides three levels of VAT forecasting:
Quick - Applies a single VAT % and average payment term per account to all budgets.
Worst Case - Assumes all income is VATable at the standard rate and ignores VAT reclaims on costs.
Advanced - Matches your VAT setup more closely, with custom VAT rates and partial VAT % per account, plus payment term adjustments.
What happens if I pay by direct debit?
What happens if I pay by direct debit?
Tick the checkbox in VAT settings if you pay by Direct Debit, and Float will add 3 extra days to your payment date.
Can I forecast monthly VAT returns?
Can I forecast monthly VAT returns?
Yes, Float detects your VAT period from your accounting platform and supports both monthly and quarterly returns.