VAT Annual Accounting Scheme

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 are 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 (external link)

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 have overpaid your VAT bill 

The scheme would not suit your business if you regularly reclaim VAT because you will 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 (external link) if you want advice on whether the Annual Accounting Scheme is right for you. 

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