1. Overview

Usually, VAT-registered businesses submit their VAT Returns and payments to HM Revenue and Customs 4 times a year.

With the Annual Accounting Scheme you:

  • make advance VAT payments towards your VAT bill - based on your last return (or estimated if you’re new to VAT)
  • submit 1 VAT Return a year

When you submit your VAT Return you either:

  • make a final payment - the difference between your advance payments and actual VAT bill
  • apply for a refund - if you’ve overpaid your VAT bill

The scheme wouldn’t suit your business if you regularly reclaim VAT because you’ll only be able to get 1 refund a year (when you submit the VAT Return).

You can join the scheme if your estimated VAT taxable turnover is £1.35 million or less.

Talk to an accountant or tax adviser if you want advice on whether the Annual Accounting Scheme is right for you.