Module 12: VAT Schemes Flashcards
Larger businesses accounting for VAT
Monthly payments on account
POA payments
1/24 of previous year’s total VAT liability made at the end of the second and third month of each VAT quarter
Final balancing payment VAT
Due with the VAT return at the end of the month following the quarter end
Can leave POA regime if
VAT liability for the year to the latest quarter falls below £1.8m
Advantages of annual accounting
- One VAT return can reduce paperwork
* Easier to manage cash flow as instalments are the same
Annual accounting not suitable for
Business that regularly reclaim VAT - only one repayment at the end of the year
Main advantage of cash accounting
Automatic bad debt relief
Flat rate scheme - turnover
VAT inclusive total turnover (taxable + exempt)
Limited cost traders - VAT flat rate scheme percentage
16.5%
Limited cost trader - criteria
VAT inclusive expenditure on goods either:
• < 2% x VAT inclusive turnover for the period
• < £1000 per annum
Repayment traders (zero rated) VAT returns
Monthly
Payments on account threshold
> £2.3m VAT liability
Annual accounting scheme threshold
VAT exclusive taxable supplies < £1,350,000 per year
Leave annual accounting scheme if
Anytime or if turnover > £1.6m
Cash accounting scheme threshold
VAT exclusive taxable supplies
