Usually, VAT -registered businesses submit their VAT Returns and payments to HM Revenue and Customs 4 times a year. With the Annual Accounting Scheme you: make advance VAT payments towards your VAT bill - based on your last return (or estimated if you’re new to VAT ) submit 1 VAT Return a year From 1 April 2019, most businesses will need to keep digital VAT records and use software to submit VAT Returns . When you submit your VAT Return you either: make a final payment - the difference between your advance payments and actual VAT bill apply for a refund - if you’ve overpaid your VAT bill The scheme would not suit your business if you regularly reclaim VAT because you’ll only be able to get 1 refund a year (when you submit the VAT Return). You can join the scheme if your estimated VAT taxable turnover is £1.35 million or less. Talk to an accountant or tax adviser if you want advice on whether the Annual Accounting Scheme is right for you.

Join or leave the scheme

You must be eligible to join the scheme. How to join You can join the scheme: online - when you register for VAT by post - fill in VAT600 AA (or use VAT600 AA/FRS to apply for the Flat Rate Scheme at the same time) Do not use the address on the form - send it to the following address instead. BT VAT HM Revenue and Customs BX9 1WR Confirmation you’ve joined the scheme is sent to your VAT online account (or in the post if you do not apply online). How to leave You can leave the scheme at any time, but you must leave if you’re no longer eligible to be in it. To leave, write to HMRC and they will confirm when you can leave. From this date, you must account for your VAT in the usual way. You have to wait 12 months before you can rejoin the scheme. BT VAT HM Revenue and Customs BX9 1WR

You can join the Annual Accounting Scheme if: you’re a VAT -registered business your estimated VAT taxable turnover is £1.35 million or less in the next 12 months VAT taxable turnover is the total of everything sold that is not VAT exempt. Exceptions You cannot use the scheme if: you left the scheme in the last 12 months your business is part of a VAT registered division or group of companies you’re not up to date with your VAT Returns or payments you’re insolvent Leaving the scheme You must leave the scheme if: you’re no longer eligible to be in it your VAT taxable turnover is (or is likely to be) more than £1.6 million at the end of the annual accounting year

Return and payment deadlines

Check your VAT Return and payment deadlines in your HM Revenue and Customs ( HMRC ) online account . VAT Return deadline There are 12 months in your VAT accounting period. Your VAT Return is due once a year, 2 months after the end of your accounting period. Most businesses now need to keep digital VAT records and use software to submit VAT Returns . Payment deadlines You must make advance payments towards your VAT bill (either monthly or quarterly) during your accounting period and a final payment when you submit your VAT Return. Payment Deadline Monthly Due at the end of months 4, 5, 6, 7, 8, 9, 10, 11 and 12 Quarterly Due at the end of months 4, 7 and 10 Final payment Within 2 months of month 12 How much do you pay Each payment is either 10% of your estimated VAT bill (monthly payments) or 25% (quarterly payments). The amount is based on previous VAT returns (or estimated if you’re new to VAT ). HMRC will write telling you when your instalments are due and how much they’ll be. The final payment (known as a ‘balancing payment’) is the difference between your advance payments and the actual VAT bill confirmed on your VAT Return. You may be due a VAT refund if you’ve overpaid HMRC . You must pay VAT to HMRC electronically, for example by Direct Debit or internet banking.

VAT Annual Accounting Scheme

Overview

Usually, VAT-registered businesses submit their VAT Returns and payments to HM Revenue and Customs 4 times a year.

With the Annual Accounting Scheme you:

make advance VAT payments towards your VAT bill - based on your last return (or estimated if you’re new to VAT)
submit 1 VAT Return a year

From 1 April 2019, most businesses will need to keep digital VAT records and use software to submit VAT Returns.

When you submit your VAT Return you either:

make a final payment - the difference between your advance payments and actual VAT bill
apply for a refund - if you’ve overpaid your VAT bill

The scheme would not suit your business if you regularly reclaim VAT because you’ll only be able to get 1 refund a year (when you submit the VAT Return).

You can join the scheme if your estimated VAT taxable turnover is £1.35 million or less.

Talk to an accountant or tax adviser if you want advice on whether the Annual Accounting Scheme is right for you.

View a printable version of the whole guide

VAT Annual Accounting Scheme

Overview

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VAT Annual Accounting Scheme

Overview

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