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HMRC internal manual

VAT Payments on Account Regime

Entering the regime: Businesses required to be part of the regime

All businesses that have: 

  • a total VAT liability of £2.3 million or more in a period of 12 months or less; and
  • tax periods exceeding one month

are required to comply with the terms of POA and pay advance instalments of their VAT return liability.

The VAT (Payments on Account) Order 1993, article 4(1) stipulates:

4(1) A taxable person falling within article 5 or 6 below shall be under a duty to pay, on account of any tax he may become liable to pay in respect of each prescribed accounting period exceeding one month beginning on or after 1st April each year, amounts (in this Order referred to as “payments on account”) determined in accordance with this Order at times so determined.

Articles 5 & 6 of the Order refer to the £2.3 million threshold and the 12-month time period. With the exception of circumstances at VPOA3000, eligibility for the POA regime works on the basis of a backward look. Businesses cannot be included on the basis of an anticipated trading pattern.