Thousands more small and medium-sized enterprises (SMEs) are now able to participate in a simplified VAT scheme, HM Revenue & Customs (HMRC) has announced.

The turnover threshold for the cash accounting scheme (CAS) has been increased from £660,000 to £1.35 million, meaning that a total of 44 per cent of VAT-registered companies can now benefit from the plan.

Under CAS, firms with a turnover that falls below the threshold can defer paying their quarter VAT until receiving payment from customers.

Without the scheme, businesses have to pay their return based on invoices issued and received.

John Brandwood, senior policy manager of corporation tax and VAT at HMRC, said: "VAT simplification schemes allow businesses various options to manage their cash flow better and employ simpler record-keeping.

"By putting businesses in control of their own affairs, the aim is to enable them to decide what's best for them."

VAT can now be paid by direct debit, according to HMRC.