VAT Annual Accounting Scheme – How to Join, Return & Payment Deadlines

16/12/2023 - 5 minutes read
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VAT Annual Accounting Scheme allows VAT-registered businesses to submit 1 VAT return a year but they still need to make advance VAT payments towards their VAT bill.

VAT Annual Accounting 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.

When you submit your VAT Return using the VAT Annual Accounting Scheme 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
VAT Annual Accounting Scheme - How to Join, Return & Payment Deadlines

VAT Annual Accounting Scheme – How to Join, Return & Payment Deadlines

Join or leave the VAT Annual Accounting Scheme

You must be eligible to join the scheme.

How to join

You can join the scheme:

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

VAT Annual Accounting Scheme Eligibility

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

VAT Annual Accounting Scheme – 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.

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.

PAYMENTDEADLINE
MonthlyDue at the end of months 4, 5, 6, 7, 8, 9, 10, 11 and 12
QuarterlyDue at the end of months 4, 7 and 10
Final paymentWithin 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 to you 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.

How can MCL Accountants help with your queries on VAT Annual Accounting Scheme?

Contact MCL Accountants on 01702 593 029 if you have any queries on VAT Annual Accounting Scheme or if you need any assistance with the preparation and submission of your business accounts or self-assessment tax returns to HMRC.