Annual Accounting Scheme
 

Using the Annual Accounting Scheme, you pay VAT on account throughout the year in nine monthly or three quarterly instalments. These instalments are based on the VAT you paid in the previous year. If you have been trading for less than a year, the instalments are based on an estimate of your VAT liability.

You only need to complete one VAT Return at the end of the year. If you have not paid enough VAT on account you make a balancing payment to HM Revenue & Customs (HMRC). If you have overpaid, you claim a refund from HMRC.

Annual accounting can reduce your paperwork because you only need to complete one annual return instead of four quarterly returns. It can also make it easier to manage your cash flow. However, it does not remove the requirement to keep all required VAT records and accounts.

Annual accounting is not suitable for businesses that regularly reclaim VAT as you would only get one repayment at the end of the year.

Another disadvantage of annual accounting is that if your turnover decreases, your interim payments may be higher than under the standard VAT accounting.

Find our more about the Annual Accounting Scheme.
 

To discuss this further and how it could benefit you, please contact us.

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