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HMRC internal manual

VAT Payments on Account Regime

Alternatives to paying POA instalments: Calculation of actual values

To calculate instalments based on actuals, a business must identify the tax it would have declared if it had submitted a monthly return. For example, for an instalment due 31 March, the business has to declare and pay the VAT liability for the month of February. 

At the end of the quarter the business must identify the VAT liability for the quarter, which must be recorded on the VAT return. It must then pay the difference between the actual instalments made and the total quarterly liability due.

Example 7

Due Date Tax period Liability for period Monthly returns (declared and paid/claimed) would be… Actuals (declared and paid) would be…
31 Mar 1 Feb- 28 Feb (£250,000) (£250,000) £0. The business is not entitled to a refund.
30 Apr 1 Mar - 31 Mar £300,000 £300,000 £300,000*
31 May 1 Apr - 30 Apr £450,000 £450,000 No actual is declared.
A VAT return of £500,000 must be declared for the quarter 1 Feb - 30 Apr and a payment of £200,000 made.
  • Note that the business must declare and pay £300,000 at the end of April and not pay the net of £50,000. The business is not entitled to a refund of £250,000 in March.

The difference between an actual declaration and a monthly return is that for an actual there is no requirement to submit any paperwork. However, if the business is in a claim position for a month then it is not entitled to any repayment.

Assurance officers must ensure that those POA businesses that have chosen to submit actuals have declared and paid the correct liabilities. If an officer finds that a business is not declaring the true liability, he should contact the POA team (see VPOA1500) who will place the business back onto instalments and inform it in writing of their decision to do so.