Online Application for Vat Annual Accounting Scheme

HMRC has added an online application service for the VAT annual accounting scheme. The main benefits of the scheme include the requirement to file only one VAT return per year.

The VAT annual accounting scheme is open to most businesses with a turnover of up to £1.35m per year. Businesses will usually make nine interim VAT payments during the year, based on their estimated total liability for the year, followed by one balancing payment with the return.

The scheme is aimed at small businesses. It can either be combined with the flat rate scheme or used by a business which uses standard VAT accounting. The use of the scheme reduces administration time and the associated cost of preparing and submitting quarterly VAT returns.

The annual accounting scheme can also help a business manage their cash flow position as instalment payments of the expected VAT liability are made on account, so that the business is not faced with a large VAT bill at the end of the year.

An application to join the scheme can continue to be made using the VAT600AA form or the new online option. All outstanding VAT returns must be submitted before HMRC will allow a business to join the scheme. There is a separate application form (VAT600AA/FRS) to join the annual accounting scheme and the flat rate scheme at the same time.

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