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VAT Annual Accounting Scheme

With the Annual Accounting Scheme you complete one VAT return per year instead of each quarter.

The advantages of using the scheme are that...

• Only one VAT return is required per year and have two months in which to complete it.
• Cash flow is helped by regular monthly payments.
• You can choose your VAT return year that you want.

It is usually necessary to make make nine equal interim VAT payments at monthly intervals during the year. The amount of the payments are based on an estimate of your total VAT liability and a balancing payment is made when the annual return is filed. You can also apply for quarterly payments that are 25% of the provisional VAT liability.

You do have to be careful that you are not building up a large balancing payment that you become unaware of if your VAT liability is increasing and the scheme is not good for any business with regular repayments of VAT as it then takes a year to get your money.

To qualify to use the scheme...

• If your annual taxable turnover is not expected to exceed £150,000 you can join at any time after registering for VAT.
  
  
• If your annual taxable turnover is between £150,000 and £1,350,000 you can join if you have been VAT registered for 12 months or more.

You can continue to use the scheme until your annual taxable turnover reaches £1,600,000.

How We Can Help You

We can advise you on whether the Annual Accounting Scheme would be suitable for you.

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