VAT Schemes For those eligible, combining the schemes could mean: Payments based on cash received rather than invoices paid Only one VAT return every year Regular payments throughout the year in instalments to improve cash flow and avoid building up a debt One simple calculation of the VAT due, by applying a flat rate percentage to the cash you receive. What VAT schemes are available and which one could help my business? 1) The Annual Accounting Scheme Benefits You choose your VAT return year end Easier Cash flow management – paying a regular set amount This scheme enables you to spread your payments evenly over the year and avoid the need to worry about late returns and payments every three months. Who Is Eligible? You will normally be eligible if your annual taxable turnover is not expected to exceed £150,000 / or if your annual taxable turnover is between £150,000 and £660,000 and have been VAT registered for 12 months or more. Businesses using the scheme may continue to use it until their annual taxable turnover reaches £825,000. Summary Make nine interim payments throughout the year - or three quarterly payments if it better suits your business needs. The interim payments are based on an estimate of your total annual VAT Bill, with a balancing payment when you submit your return. You can also increase or decrease the monthly payments if your business circumstances change 2) Retail Schemes Benefits An alternative to standard VAT accounting. Who Is Eligible? Find out about Retail Schemes at HM RC Website: http://www.hmrc.gov.uk/home.htm Summary Retail schemes are for businesses making retail sales who cannot reasonably be expected to account for VAT in the normal way. 3) Margin Schemes Benefits Account for VAT based on the difference (the margin) between the purchase price and selling price of goods, rather than the full value of the sale. Who Is Eligible? Any VAT registered business can use the scheme to account for sales on second hand goods. Summary Account for VAT on the margin of Second-hand goods, antiques, works of Art and collectors items. 4) The Cash Accounting Scheme Benefits Only pay VAT on invoices you have issued once your customers have paid you, improving your cashflow. Who Is Eligible? You can choose this scheme if your annual turnover is not more than £660,000 and you meet certain conditions. Businesses using the scheme may continue to use it until their annual taxable turnover reaches £825,000. Summary Account for VAT on the payments you receive and make not on invoices you issue and receive. 5) The Flat Rate Scheme Benefits Reduction in the time taken accounting for your VAT Simplifying record keeping, increases certainty and saves time for your business. Who Is Eligible? Your annual taxable turnover will be no more than £150,000 and your total business income no more than 187,500. Summary Great for small businesses - Calculate VAT payments as a Flat rate percentage of turnover Scheme Awareness Businesses that have benefited from the schemes “It’s easier to do, so much quicker. When you have to pay the VAT, you had to work it out first, but now it’s instant, you can do it in about 15 minutes” Flat rate scheme user, Hertfordshire “Quarterly was a bit of a pain. If the money is not going in you have to find it” annual accounting scheme user, Birmingham "...the benefit to me is that you are paying after you have received the money” cash accounting scheme user, Surrey VAT accounting schemes All of the schemes highlighted above can be used in any combination. It couldn’t be easier to find out what VAT accounting scheme might help your business. Click on the following link and answer a few simple questions. The results will help you decide which scheme might best suit you. Click here for more information.