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Annual Accounting Scheme

The Annual Accounting Scheme for VAT is designed to reduce the administrative burden on smaller businesses by only requiring a VAT return to be submitted once a year. Ordinarily a VAT registered business would need to file a VAT return once every quarter.

On the annual accounting scheme you will be expected to pay a monthly estimate of VAT and file the VAT return at the end of each year. When the VAT return is filed, any NET difference against the funds already paid will be calculated and a balance will then become due or repayable.

The key features for the Annual Accounting Scheme are as follows.
  • Make estimated monthly payments towards your VAT liability
  • File a single VAT return once a year
  • Any difference calculated will then be paid or reclaimed with HMRC


You will only be allowed to enter the Annual Accounting Scheme if your taxable turnover does not exceed £1.35 million.

VAT Return Deadline

There are 12 months in your VAT accounting period. Your VAT return is due once a year, 2 months following the end of your VAT accounting period. Failure to submit a VAT Return on time will result in added interest payments and potential withdrawal from the scheme.

Payment Deadlines

VAT must be paid in advance of submitting your return, typically this will be on a monthly or quarterly schedule. Any final payment must be made within 2 months of your VAT annual accounting period.

How are payments calculated?

The amount you will pay each month will be estimated at 10% of your annual VAT liability. If you are on a quarterly schedule this will be calculated at 25% of your annual VAT liability. In the first year an estimate of your expected VAT liability will be made, following the submission of your first return any successive payments will be based on the first VAT return.

HMRC will contact you in writing to inform you what the payments will be and when each payment must be settled.

Registering for Annual Accounting VAT

We offer an online VAT registration solution for those wishing to obtain a VAT number and join the Annual Accounting Scheme. Feel free to call or email us if you have any questions. To start a new application click here. --Latest--