Does anyone know how you apply the VAT when you are on Cash accounting and operate the DRC VAT scheme in construction. If you accept a payment on account from a customer but you have yet to invoice them, how do you apply the VAT, is it still the normal 20%. Under Cash accounting this would apply the VAT to the VAT liability straight away and under DRC there would be no VAT to us as this gets passed to the contractor. Any ideas?