How it works
Rather than four quarterly returns, you file a single annual VAT return. Through the year you make advance payments in instalments — commonly nine monthly or three quarterly payments based on last year’s liability — and settle up with a balancing payment or refund when the annual return is filed. It turns a variable quarterly bill into a predictable monthly one.
Who can join
- Join: expected VAT-taxable turnover of £1.35 million or less
- Leave: once turnover exceeds £1.6 million
- Requirement: up to date with VAT returns and payments
The trade-offs
| Upside | Downside |
|---|---|
| One return a year — fewer deadlines | Only reconcile once a year — less visibility |
| Smoother, predictable cash flow | Instalments can overpay if turnover falls |
| Good for steady, budgeting businesses | Slow for businesses usually due refunds |
Pick the right VAT scheme
Standard, annual, cash accounting or flat rate — the best fit depends on your turnover, payment patterns and whether you’re usually due refunds. We compare them for your business and run whichever wins. Call 0114 327 1480.