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HMRC internal manual

VAT Annual Accounting Scheme

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HM Revenue & Customs
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Removal from the scheme: Removal through default or change in circumstance - law

Authorisation to use the annual accounting scheme may be withdrawn as outlined in Regulations 53(2) and 54(1). Regulation 53(2) details those circumstances where a business ceases to be eligible to use the scheme:

53 (2) An authorised person ceases to be authorised when-

(a) at the end of any transitional period or current accounting year the value of taxable supplies made by him in that period or, as the case may be, year has exceeded £1,600,000 or

(b) his authorisation is terminated in accordance with regulation 54 below;

(c) he-

(i) becomes insolvent and ceases to trade, other than for the purpose of disposing of stocks and assets; or  


(ii) ceases business or ceases to be registered; or  


(iii) dies, becomes bankrupt or incapacitated;  

(d) he ceases to operate the scheme of his own volition.

Regulation 54 details those circumstances where authorisation to use the scheme may be withdrawn:

54-(1) The Commissioners may terminate an authorisation in any case where-

(a) a false statement has been made by or on behalf of an authorised person in relation to his application for authorisation; or

(b) an authorised person fails to make by the due date a return in accordance with regulation 50(2)(b) or regulation 51(a)(iii) or (b); or

(c) an authorised person fails to make any payment prescribed in regulation 50 or 51; or

(d) where they receive a notification in accordance with paragraph (2) below; or

(e) at any time during an authorised person’s transitional accounting period or current accounting year they have reason to believe, that the value of taxable supplies he will make during the period or, as the case may be, year will exceed £1,600,000; or

(f) it is necessary to do so for the protection of the revenue; or

(g) an authorised person has not, in relation to a return made by him prior to authorisation, paid to the Commissioners all such sums shown as due thereon; or

(h) an authorised person has not, in relation to any assessment made under either section 73 or section 76 of the Act, paid to the Commissioners all such sums shown as due thereon.

(2) Where an authorised person has reason to believe that the value of taxable supplies made by him during a transitional accounting period or current accounting year will exceed £1,600,000, he shall within 30 days notify the Commissioners in writing.