Annual accounting scheme

Question 1

File annual VAT returns

Answer 1

(rather than quarterly ones) but make monthly direct debit payments on account towards VAT liability.

Question 2

Pay interim VAT payments

Answer 2

based on 90% of previous year’s net VAT liability, spread over 9 monthly payments starting in month 4 of the year.

Question 3

At end of 12 months,

Answer 3

complete annual return within 2 months and pay any balance outstanding.

Question 4

Only available if

Answer 4

VAT exclusive turnover does not exceed £1.35m

Question 5

Must withdraw

Answer 5

once turnover reaches £1.6m

Question 6

advantage 1

Answer 6

Reduced number of VAT returns to complete and submit;

Question 7

advantage 2

Answer 7

More predictable cash flows

Question 8

advantage 3

Answer 8

2 months to prepare final year end return as opposed to one month

Question 9

disadvantage 1

Answer 9

Prior year and current year VAT may be different amounts

Question 10

disadvantage 2

Answer 10

Uncertainly regarding final payment

Question 11

disadvantage 3

Answer 11

Risk of reduced quality books and records with annual rather than quarterly returns