Small businesses with annual sales below £1.35 million may opt for filing their VAT Return on a yearly basis instead of quarterly. This VAT scheme is called Annual Accounting Scheme.
Under this scheme, the business only needs to file one VAT return per year. The VAT office will set the estimated VAT liability to be paid by the business based on previous year VAT liability payments.
Payment options and arrangement with VAT office
The business simply makes VAT payment by direct debit or other approved electronic payment methods from the fourth month to through to 12th month of the VAT accounting year either on monthly or quarterly basis.
The business must specifically request payment options to be on quarterly basis if not it will automatically be on monthly basis.
When to file VAT Return
The business is required to submit their VAT return two months after the year end together with the balance of VAT payment due.
Flexibility of Annual Accounting Scheme
The business is entitled to request reduction in the interim payments if the sales is projected well below the previous year or may request to withdraw from the annual accounting scheme any time by writing to HMRC.
Advantages of Annual Accounting Scheme
The advantages of choosing VAT annual accounting scheme can be summarized below:
The scheme provides the business with more predictable cash flow because the business make regular payments on account throughout the year.
Possible cash flow advantage if your annual sales is foreseeable to increase each year.
Cut down substantial administrative work because you only need to send in one return per year
The business must leave the scheme if annual sales reach £1.6 million.
Concise Accountancy offers online bookkeeping services to businesses to take care of their VAT bookkeeping requirements. This online version of bookkeeping is similar to that of the “the off shelf” bookkeeping software except that this facility provides you with the on-going support from our qualified bookkeepers and you can access and update your VAT accounting records 24 hours a day at your convenient.
Our accountants will process your VAT returns efficiently and do your year end accounts using information posted on the online bookkeeping system.
Concise Accountancy – Making VAT administration simple and easy for all