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HMRC internal manual

VAT Annual Accounting Scheme

Payments: Cash or cheque interim payments

The annual accounting system will not recognise cash or cheque payments. Any monies received by this method will be appropriated to any outstanding debts, or held as a non-appropriated amount.

This would result in the business incurring payment defaults and ultimately being removed from the scheme. The annual accounting scheme was introduced to simplify VAT accounting for small businesses and to limit the amount of manual intervention in the scheme. If an applicant insists on making interim payments by cheque or cash, it will be refused entry to the scheme.