Guidance

Annual accounting (VAT Notice 732)

Who can use the VAT Annual Accounting Scheme and how to apply.

Details

This notice cancels and replaces the previous version of Notice 732 (November 2013). Details of any changes to the previous version can be found in paragraph 1.2 of this notice.

1. Overview

1.1 What this notice is about

It explains the Annual Accounting Scheme, who can use it and how to apply to join.

1.2 What’s changed since the previous version

Paragraph 5.2 has been updated to show a new telephone number for enquiries about VAT bank giro books.

Changes to the VAT Helpline numbers.

1.3 The Annual Accounting Scheme

The Annual Accounting Scheme allows you to complete just one VAT Return each year, instead of 4. You pay instalments of the VAT that you expect to owe, so that you’re not faced with a large VAT bill at the end of the year.

You can choose to make 3 (quarterly) or 9 (monthly) instalments towards your end of year VAT liability. These must be paid by Direct Debit, Standing Order or other electronic means.

When you join the scheme HM Revenue and Customs (HMRC) calculate and notify you of the instalment amounts and dates they’re due. If you think we’ve got it wrong or your business changes, you can ask us to amend the instalments.

As well as paying by instalments, the scheme allows you to make additional voluntary payments towards your end of year VAT bill.

At the end of the year you submit your VAT Return and any balance outstanding. If you have paid more money than the amount due on your return, we’ll return the over payment.

1.4 How the scheme helps

The main benefits of the scheme are:

  • it helps you smooth out your cash flow by paying a set amount each month or quarter
  • you can make additional payments as and when you can afford to
  • you only need to fill in one VAT Return each year instead of 4
  • you get 2 months to submit your annual VAT Return and balancing payment, instead of one
  • you can align your VAT year with the end of your business tax year to simplify your end of year routines

1.5 What to look out for if you use the scheme

Some businesses find that the discipline of quarterly VAT returns helps them to keep on top of their VAT and other business records.

If you use annual accounting, you’ll still need to keep on top of your records to avoid problems at year end.

Instalments under the scheme must be paid electronically. These don’t qualify for any extension to due date as with normal returns.

But, you do get 2 months to submit your return and balancing payment, instead of 1. Section 5 explains the electronic payment options available.

1.6 How to join the scheme

There are application forms in section 8 and section 9 of this notice.

The form in section 9 is for joining both the annual accounting and flat rate schemes at the same time.

2. Conditions and eligibility for using the scheme

2.1 Eligibility

Most businesses that expect to have taxable supplies of up to £1,350,000 may join the scheme.

2.2 Work out the value of your taxable supplies

The £1,350,000 test excludes VAT. Taxable supplies are the value, excluding VAT, of any standard, reduced and zero-rate supplies that you’re likely to make in the coming year. Don’t include any exempt supplies or the value of any sales of your capital assets.

2.3 How to tell what your future taxable supplies will be

If you’ve been registered for less than 12 months, the simplest way is to estimate in the same way you did when you completed form VAT 1 Value Added Tax: Application for Registration. If you’ve been registered for 12 months or more, you can use the value of your past year’s taxable supplies as a guide.

If you believe these methods are not a good indicator of your future taxable supplies, you can make the estimate in any reasonable way. You might use either:

  • your business plans
  • information relating to pre-registration business activity
  • business information from a previous owner

2.4 What happens if the value of your taxable supplies goes over £1,350,000 per year

Once you’re in the scheme, you can stay in it until the value of your taxable supplies goes over £1,600,000 per year. Unless you go over this limit significantly, you’ll usually be withdrawn from the scheme at the end of the annual accounting year in which the value of your taxable supplies goes over £1,600,000.

2.5 What happens if your estimate is wrong

We will not penalise you for being wrong provided you can show that there were reasonable grounds for your estimate.

If your estimate of turnover had no reasonable basis and you’re above the threshold for the scheme, we’ll immediately remove you from the scheme. So you should keep a record of how you made the estimate.

If you realise during the year that your turnover has or will go over the £1,600,000 threshold you must notify us immediately and we’ll remove you from the scheme (see paragraph 4.7).

Example

You don’t expect your first year’s turnover to go over £1,350,000. At the end of the year your turnover is £1,420,000 and you expect it to stay at that level. Although your original estimate was wrong and you should not have started to use annual accounting, you may remain in the scheme until your turnover goes over £1,600,000.

2.6 Who can’t join the scheme

You can’t join the scheme if you:

  • are registered for VAT as part of a group or division of a company
  • have stopped using annual accounting in the previous 12 months
  • are insolvent
  • have a VAT debt that is getting bigger, if you have a small debt and have agreed proposals with us to clear it, you may be allowed to use the scheme

2.7 Conditions of using the scheme

When using the scheme you must:

  • make interim payments by the date we notify
  • make interim payments by Direct Debit, Standing Order or other electronic means
  • submit the annual VAT Return and any balancing payment by the due date shown on the return

If you don’t follow these conditions you may be removed from the scheme. If you don’t make the balancing payment and send return on time we may issue a default surcharge.

2.8 Using other schemes at the same time as the Annual Accounting Scheme

You can use the Annual Accounting Scheme with the Flat Rate Scheme, this can make a significant difference to the cost of complying with VAT rules. Section 9 contains more details about using the 2 schemes together.

Other schemes that you may use with annual accounting are:

3. How the scheme works

3.1 The basics

The scheme works by allowing you to make a number of interim payments during the year (usually 9). You then get 2 months from the end of your VAT year to submit the annual return and make any balancing payment.

3.2 Annual accounting year start

If you join the scheme, we’ll take the first day of your current VAT period as the start date for the new arrangements. This means that your first VAT period on the scheme will normally run from the first day of the VAT period in which you apply. But, if you apply late in a VAT period it may start from the first day of your next VAT period. For more information, see paragraph 8.3.

Example

If your quarterly VAT period starts on 1 May and ends on 31 July and we approve you to use the scheme on 1 June, then your first annual VAT period will start on 1 May.

But if you apply on 27 July, your first annual VAT period will start on 1 August. This is because we’ll have already issued the VAT Return for the quarter end 31 July.

3.3 Annual accounting year end

Your annual accounting year will end on the last day of the month, normally 12 months after you began using the scheme. But you can request an annual accounting year that suits your business needs. So, you can align your VAT accounting year end with your financial year end, or take into account busy and slack periods in your business year.

Example

If your first annual VAT period starts on 1 May, then normally your annual accounting year will end on 30 April.

3.4 Annual accounting period

Your annual accounting period might not always be 12 months. If you ask for a specific year end, your first period may be shorter than a year so that it coincides with your chosen date. No VAT period may be more than 12 months long.

Note: if your period is for less than 4 months we will not ask you to make interim payments.

Example

Your current quarterly return starts on 1 July and ends on 30 September. You apply to join the Annual Accounting Scheme on 11 August and want a year end of 31 December.

The first day of your annual accounting year will be 1 July and it will end 6 months later on 31 December. We can’t make it end on 31 December of the following year, as that would result in the return being 18 months long.

3.5 Changing your annual accounting year end

You can change your annual accounting year end, but this may result in you being issued with one or 2 short period returns during the transition because no VAT accounting period can be longer than 12 months.

3.6 Return due date

The due date for annual VAT returns is normally 2 months after the end of the annual accounting year. But, if you have a part year of less than 4 months, you will only get a month to submit your return and balancing payment.

In all cases, both the dates for the start and end of the VAT period, and the due date will be shown on the return.

3.7 Applying for the scheme

You don’t need to apply to join the scheme each year. As long as you’re still eligible, you’ll automatically continue on the scheme. After you’ve submitted your VAT Return we’ll tell you the amounts of the interim payments for the next accounting year and the due date of your next annual VAT Return and balancing payment.

4. Instalments

4.1 When payments are due

The normal rule is that you’ll pay nine instalments of 10% of your last year’s annual VAT liability as shown in paragraph 4.5.

The following shows when the payments are due:

Payments are due

Months of period 1 2 3 4 5 6 7
Monthly payments       1st 2nd 3rd 4th
Quarterly payments       1st     2nd

Payments are due

Months of period 8 9 10 11 12 13(1) 14(2)
Monthly payments 5th 6th 7th 8th 9th   Final payment
Quarterly payments     3rd       Final payment

4.2 Instalments

You can apply to make 3 quarterly interim payments if it would better suit your business needs. These will be calculated as shown in paragraph 4.5 and will be due in months 4, 7 and 10 of the annual accounting period with a balancing payment with your return.

4.3 How to tell us which instalment plan you want to use

Unless you request the quarterly payment pattern, you’ll be placed on the monthly pattern. If you want to make quarterly payments you should tell us when you complete your application form.

4.4 How to change your payment plan

We’ll normally expect you to stay on the same payment pattern (quarterly or monthly) for at least one year. Please write to the Annual Accounting Registration Unit (address in paragraph 8.6) if you wish to change payment patterns.

4.5 How much your instalments will be

Monthly

If you’ve been registered for 12 months or more, each monthly instalment will be 10% of your previous year’s VAT liability.

If you’ve been registered for less than 12 months each instalment will be 10% of an estimation of your expected VAT liability.

Quarterly

If you’ve been registered for 12 months or more, each quarterly instalment will be 25% of your previous year’s VAT liability.

If you’ve been registered for less than 12 months each instalment will be 25% of an estimation of your expected VAT liability.

In either case we’ll let you know when your payments are due and how much your instalments will be.

Example

Your VAT liability for the previous year was £10,000. If you’re on monthly payments you’ll pay 9 instalments of £1,000. If you make quarterly payments you’ll pay 3 instalments of £2,500. The balance of your actual VAT liability for this year will be due with your VAT Return.

4.6 If you disagree with the amount of your instalments

Always check that the schedule of payments is a true reflection of your business. If the interim payments are set too low you will have to make a larger balancing payment. If they’re too high then you will be paying over money earlier than you have to.

If you disagree with the amount of your interim payments, or you expect your VAT liability to increase or decrease significantly (see paragraph 4.7) over the course of the year you should contact the Annual Accounting Registration Unit (address in paragraph 8.6) and explain how you’ve calculated your interim instalments. If we agree with your calculations we will write and inform you of the revised instalments.

4.7 Business circumstances change

If there are significant changes, or you expect significant changes, to your business during the year that will affect the amount of VAT you pay, you must contact the Annual Accounting Registration Unit immediately (address in paragraph 8.6). Significant changes include, you realise:

  • the value of your taxable supplies will rise above £1,600,000 for the current year, or it has already gone over £1,600,000, this may be due to new contracts, buying another business
  • that your VAT payable will, or has increased by 10% since the last time you calculated your instalments

We will amend your interim payments to reflect your new liability, or the changes to your business may result in you being removed from the scheme.

Example

At the end of the annual period ending 31 March your VAT liability was £30,000 and you’re informed that your monthly instalments are £3,000. During your new annual accounting year you realise your VAT liability will be nearer £40,000. You write in to us and we will amend your instalments to £4,000.

4.8 Voluntary payments

You can make voluntary payments at any time in multiples of £5 by Bank Giro Credit, or CHAPS/Bacs.

Paragraph 5.2 and paragraph 5.3 give further information on these methods.

5. Paying your instalments

5.1 How to tell HMRC what method you want to use

On your application form tick the box for the payment method of your choice. Once on the scheme, if you wish to change to another method please write to the Annual Accounting Registration Unit, address in paragraph 8.6. We expect you to use your chosen method of payment for at least one year.

5.2 Available payment methods

Payment method Action required
Direct Debit Complete the Direct Debit instruction form VAT 623. We’ll send you a schedule advising when and how much we will be debiting from your account. The instruction should be signed by the owner, a partner, an authorised agent or a director of the business that is applying to join the scheme.
Standing Order When your application is accepted we will send you a standing order mandate. Complete the mandate and send it to your bank. This will tell your bank about when and how much to pay us.
Bank Giro Use the Bank Giro slips we send to you when you send your payment to your bank. You’ll need to make your payments in time to reach us by the due date. If you need additional slips, please phone us on Telephone: 03000 519206.
CHAPS/Bacs Make arrangements with your bank to ensure your payment instructions are received by the required dates. Our bank details are:
Account name: HMRC VAT
Sort code: 08-32-00
Account number: 11963155

5.3 Payment method to choose

The choice is a matter for you. Seek advice from your bank to ensure the payment arrangements enable you to make the payments on time. They will also be able to give you details of the cost of each method.

Direct Debit offers the convenience of setting up the instruction once.

5.4 If you forget to make a payment

If you miss a payment we will send you a reminder and a request for immediate payment. The late payment will have to be paid by CHAPS or Bacs.

You have a responsibility to ensure that the payments are received into our bank account by the due date. If you don’t, you may be removed from the scheme.

5.5 Changes during the year

You must inform the Annual Accounting Registration Unit (address in paragraph 8.6) of any changes of bank or bank details, so that payment arrangements can be revised.

If your interim payment amount changes during the year and you’re not paying by Direct Debit, you must contact your bank in good time to ensure the new amount is paid at the right time.

6. Completing and paying your VAT Return

6.1 How to fill in the annual return

Fill in your annual VAT Return in the usual way for the period shown at the top of the return. Don’t deduct any interim payments you’ve made during the year when calculating the figure to put in box 5.

If you need more information about how to fill in your VAT Return see Notice 700/12 Filling in your VAT Return.

6.2 How to calculate the VAT to pay at the end of each year

The amount entered in box 5 of the VAT Return is the amount due for the year. This figure will be calculated automatically if you are completing your return online. But the balancing payment you send to us should be the box 5 figure minus the interim payments you have made for the annual period.

Example

During the year you have paid 9 instalments of £3,000 each. At the end of the year you calculate that your VAT liability for the year was £32,000. You complete your VAT Return with box 5 showing tax due of £32,000. You submit your return and payment of the remaining £5,000 to us by due date.

If the monthly instalments you have made during the year are more than the amount in box 5 on the return, we will refund the difference when we receive your annual VAT Return.

Always submit your VAT Return by the due date even if you don’t need to make a balancing payment.

6.3 Online VAT Return

Paper VAT returns are being phased out, and we’ll tell you in writing if you have to submit your return online. Even if you’re not required to submit your return online, you can.

To submit your return online you must register and enrol through the GOV.UK website and then choose to use the VAT Online Returns Service or commercially available software.

If you submit your VAT Return online you must also pay any VAT due by electronic means.

6.4 How to pay a balancing payment

You can pay any balance due at the end of the year by Direct Debit, Bacs, CHAPS, Bank Giro or by debit or credit card. See How to pay VAT for information on these methods.

If you use paper VAT returns you can also pay by cheque. The instructions on how to pay are on the reverse of the return.

Please note that the additional time for submitting or paying VAT returns electronically is not available if you use the Annual Accounting Scheme. This is because you already get an extra month to do this.

7. Special circumstances

7.1 Repayment traders

You’re a ‘repayment trader’ if you consistently claim more VAT from us than you pay. You can still join the scheme and you won’t need to make interim payments if you are in an annual repayment position. However, you won’t receive any repayment due until you have submitted your VAT Return at the end of your annual accounting year.

If you occasionally have repayment returns as well as payment returns, the scheme may not be suitable for you. Repayments can only be made based upon the VAT declared as claimed on a VAT Return. If you’re in a VAT claim position during the year you will be unable to submit a return and will have to wait till the end of the year. At that time you submit a normal return and this may result in you paying us VAT or submitting a claim.

7.2 Combining a retail scheme with annual accounting

In most cases you follow the scheme rules that apply to each quarter, but perform the calculations once a year. The only exception to this is if you are using the Direct Calculation Scheme 2.

In that case, your calculation follows the rules for the annual adjustment in VAT Notice 727/5 Retail schemes: how to work the direct calculations schemes.

7.3 If you’re partly exempt and use the Annual Accounting Scheme

If you’re partly exempt, the date when you make your partial exemption calculation must coincide with the end of your annual accounting period. This means that you don’t have to do your partial exemption calculations on a quarterly basis, you just make the calculation using the figures for the whole of the annual accounting period.

If your first accounting period is for a part year, its end date will still coincide with the end of your partial exemption year and you must complete your partial exemption calculations.

7.4 Buying a business as a going concern

If the business you buy will significantly change the total amount of VAT you’ll pay in the future you must contact us immediately (see paragraph 4.7).

7.5 If you want to leave the scheme

Just write to the Annual Accounting Registration Unit (address in paragraph 8.6) and tell them you wish to return to your normal method of paying and accounting for VAT. You’ll still be entitled to 2 months to submit your final VAT Return on the scheme and any balancing payment.

But if you leave the scheme less than 4 months into a shorter period (as described in paragraph 3.4), you will only get one month to submit your final VAT Return and any balancing payment.

If you choose to leave the scheme, or are removed for failing to comply with the conditions you will not be able to rejoin for a period of 12 months.

7.6 Withdrawing the scheme

We can withdraw your authorisation to use the scheme at any time for protection of the revenue.

We can also withdraw your authorisation to use the scheme if you’ve calculated your expected annual taxable supplies incorrectly, or are otherwise not eligible to use the scheme.

7.7 De-registering from VAT

If you de-register from VAT you have to complete a final VAT Return. You’ll normally get 2 months to make this return and pay your balance of VAT due.

However, if you leave the scheme shortly after joining as per paragraph 7.5 you’ll only get 1 month to submit your return and balancing payment.

7.8 Bankrupt or insolvent

If you become bankrupt or insolvent you must stop using the scheme immediately.

8. Form VAT 600AA: Annual accounting application

8.1 How to apply

You can apply either:

  • online, you’ll need a Government Gateway account
  • by completing the paper application form VAT 600AA.

This form is for those businesses that only want to use the Annual Accounting Scheme. If you want to use the Annual Accounting Scheme in conjunction with the Flat Rate Scheme, you must use the joint application form VAT 600AA&FRS.

8.2 Keeping copies of your application

It’s a good idea to keep a copy and it’ll help if you have any questions about your application.

8.3 When to apply

You must give us enough time to process your application. This is because your authorisation to use the Annual Accounting Scheme normally takes effect from the first day of the period in which your application is finalised.

If you apply near the end of your accounting period, and the return for that period has already been issued, your entry to the scheme will be delayed until the start of the next period.

Example

Your quarterly VAT period starts on 1 May and ends on 31 July. If you apply to join the scheme on 27 July your first annual VAT period will start on 1 August. This is because we will have already issued your quarterly return for the period ending 31 July.

You must submit all the quarterly returns you receive.

8.4 When to start using the scheme

We’ll notify you in writing if your application is accepted or not. If accepted the letter will tell you the:

  • amount and timing of the interim payments we’ve calculated for you
  • method of electronic payment that you’ve chosen
  • due date for your annual return and balancing payment

8.5 How to fill in the paper application form

The following notes may help you complete your paper application form.

Section A

Name - enter the normal name by which your business is known. If you’re already registered for VAT this should be the name on your certificate of registration (form VAT 4).

Address - enter the address of your principal place of business.

VAT Registration Number - this must be quoted on all correspondence with us. It can be found on your VAT 4 or VAT Return. If you’re applying at the time you register please ensure that your application is firmly attached to your VAT 1.

Phone number - please supply a daytime phone number where we can contact you if there is a query about your application.

Section B

Annual accounting year-end - this is the month in which you want your annual return to finish. If, for example you put June, your annual period will end on 30 June. Your first period doesn’t have to be a full 12 months, see paragraph 3.4.

Section C

Frequency of payment - tick the relevant box on the form to let us know if you want to pay quarterly or monthly interim payments.

Method of interim payments - enter your preferred method of payment by ticking the relevant box on the form. (See paragraph 5.2 for details of the electronic payment methods.)

Section D

Declaration - this should be signed by the owner, a partner, an authorised agent, or a director of the business that is applying to join the scheme.

8.6 Where to send my completed application form

If you’re using the paper form, send your completed application form to:

HM Revenue and Customs
Annual Accounting Registration Unit
National Registration Service
Imperial House
77 Victoria Street
Grimsby
North East Lincolnshire
DN31 1DB

This is also the address to send any other correspondence about your use of the Annual Accounting Scheme, such as changes to bank details or year end. For general enquiries, including those about the Annual Accounting Scheme, phone the VAT Helpline.

Note: if you’ve chosen to make payments by Direct Debit then you must also complete a bank instruction form VAT 623.

9. VAT 600 AA&FRS: Application to join both the annual accounting and the flat rate schemes

Complete the VAT 600AA&FRS Application to join the Annual Accounting Scheme and the Flat Rate Scheme

9.1 If you want to use the annual accounting and the flat rate schemes together

Complete the joint application form. This form is for those businesses that want to apply to use both annual accounting and flat rate schemes. If you only want to apply to use the Annual Accounting Scheme, you must complete the form in section 8. Send the completed form to the Annual Accounting Registration Unit at the address in paragraph 8.6. Registration for each scheme will be looked at separately.

If you wish to pay by Direct Debit, you must complete the Direct Debit instruction form VAT 623.

9.2 How to use both schemes

You follow the rules in Notice 733 Flat rate scheme for small businesses for calculating your VAT Return figures and for filling in the return. Instead of doing that 4 times a year, you do it just once when your annual accounting return is due.

9.3 What happens after you’ve applied to use the schemes

If you’ve applied for both schemes, you’ll get 2 letters. Each letter will refer to one scheme only and tell you whether we have accepted your application and any start date for you to use the scheme.

If your application is accepted for only one of the schemes, you must follow the rules of that scheme only.

If you’re accepted onto annual accounting, the letter will give the information stated in paragraph 8.4.

9.4 Changes to flat rate percentage during the year

If during the year your business activities change, then you must check to see if you fit into a new sector. If you do, you must pay a different flat rate percentage. You must also pay a different flat rate percentage if we change the flat rate percentage for the sector into which your business fits.

9.5 If you’re using both schemes and your business varies over the year

If you’re using the Flat Rate Scheme and your business covers more than one trade sector, you use the flat rate percentage for what you expect to be the largest part of your business by turnover in the coming year.

If the balance of your business changes during your flat rate year, then you continue to use the percentage that was appropriate at the beginning of that year. If your business includes activities in more than one flat rate sector, you must review the balance between the sectors at each anniversary of joining the Flat Rate Scheme.

If, on the anniversary, the balance has changed, or you expect it to in the coming year, use the flat rate percentage for what you expect to be the largest portion of your business in the coming year.

9.6 How to calculate your return when your flat rate changes

When you calculate your return, you must do 2 calculations. The first of these will cover the period until the rate changed, the second will cover the period after the change and be at a different rate. If more than one change of rate occurs during the year then further calculations will need to be made in the same way.

Example

During your annual accounting year, your rate changes from 10% to 9%. You must calculate your VAT from the start of the period to the day before the change using a rate of 10% and calculate your VAT from the date of change to the end of the period using the rate of 9%. Add the 2 VAT figures together and put them on your VAT Return.

Notice 733 Flat rate scheme for small businesses may help further.

9.7 How to fill in the joint application form

The following notes will help you fill in the joint application form:

Section D

Main business activity - decide which of the sectors listed in section 6 of Notice 733 Flat rate scheme for small businesses most accurately describes your business. If your business covers more than one sector, choose the sector that is the main part of your business by VAT inclusive turnover.

Flat rate percentage - this is the percentage for your sector as shown in the table in section 6 of Notice 733 Flat Rate Scheme for small businesses.

Start date - your options are:

  • leave this blank, if you do this your authorisation will start at the beginning of the next annual accounting period
  • write ‘date of registration’, or ‘EDR’, if you do this your authorisation will begin from the date you registered for VAT provided you apply at, or close to, the time you register
  • write ‘AA start date’, this will give you the same start date as the annual accounting start date
  • write the date you want the scheme to start, this can’t normally be retrospective

Section E

Declaration - this should be signed by the owner, a partner, an authorised agent or a director of the business that is applying to join the scheme.

9.8 When your joint use of the schemes starts

Joint use of the schemes will normally start from the beginning of the period in which you apply to use annual accounting.

If this is not what you want, the form allows you to request a different start date for your use of the Flat Rate Scheme.

9.9 How to complete your annual return if the Flat Rate Scheme and annual accounting have different start dates

If you want to use different start dates for the 2 schemes you will need to do 2 calculations when you complete your annual accounting return:

  • one calculation for the period you were not on the Flat Rate Scheme, using normal VAT accounting rules
  • one calculation for the period you were on the Flat Rate Scheme using the rules for calculating liability under the Flat Rate Scheme

Your total VAT liability for the return period will be the sum of those 2 calculations.

9.10 Joining the Flat Rate Scheme if you’re already using the Annual Accounting Scheme

If you apply to begin using the Flat Rate Scheme in the middle of an annual accounting period, you will have to do 2 calculations when you complete your return as explained in paragraph 9.9.

To avoid 2 calculations, it is best to apply to use the Flat Rate Scheme at the start of an annual accounting period. If you don’t want to wait to the end of your annual accounting year, you can change your existing annual accounting year end to an earlier date and start both schemes together. This will result in some amendments to your annual accounting periods and payments to accommodate these changes.

9.11 If you no longer qualify for one scheme, but still qualify for the other

You will normally continue in the scheme you still qualify for, unless you request removal. The 2 schemes have different conditions and you must continue to check that you qualify for both.

If you leave the Flat Rate Scheme in the middle of an accounting period, you will have to do 2 calculations when you complete your next annual VAT Return. This is explained in paragraph 9.9. In this case the first calculation will cover the period you used the Flat Rate Scheme and the second the normal VAT accounting rules.

Help us improve this notice

If you have any feedback about this notice please email: customerexperience.indirecttaxes@hmrc.gsi.gov.uk.

You’ll need to include the full title of this notice. Don’t include any personal or financial information like your VAT number.

If you need general help with this notice or have another VAT question you should phone our VAT Helpline or make a VAT enquiry online.

Putting things right

If you’re unhappy with HMRC’s service, contact the person or office you’ve been dealing with and they’ll try to put things right.

If you’re still unhappy, find out how to complain to HMRC.

Published 17 April 2014