The UK annual accounting scheme is an unpopular option for businesses since it is based mainly on estimations. Instead of reporting and paying VAT 4 times a year, once for each quarter
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
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.