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HMRC internal manual

VAT Payments on Account Regime

Alternatives to paying POA instalments: Calculation of actual values

The instalment due dates for actuals are the same as for POA instalments which are the last day of the 2nd and 3rd month of the quarter. The amount the business pays on these due dates is the actual liability for the preceding month. 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

Quarterly Period: 1st February to 30th April

Period actual relates to Actual instalment due date Liability for actual period Actual instalment to pay Comment
         
1st Feb - 28th Feb 31st March (£250,000) £0 Business is in a credit position but is not entitled to a repayment
1st Mar - 31st Mar 30th April £300,000 £300,000 Business must still pay the actual liability. It is not entitled to the refund for the previous month and cannot net off the amounts

 

The liability in the final month (1st April – 30 April) of the quarter is £450,000. The next due date is for the quarterly return and balancing payment for the quarter.

The business submits a return for £500,000 with a balancing payment of £200,000 (£500,000 liability less £300,000 actual paid).

If the business was on monthly returns, it would be entitled to a repayment for the period 1st Feb to 28th Feb. With actuals there is no entitlement to a 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.