Over a million businesses now eligible for simpler VAT

18 April 2006:

Businesses with a turnover up to £1.35 million are able to join the Annual Accounting VAT simplification scheme. This doubles the previous threshold of £660,000, allowing more than one million businesses to join the scheme and spread their VAT payments throughout the year instead of grappling with a lump sum every quarter. They include almost 19,000 accountancy firms.

Membership of the Annual Accounting Scheme is designed to make those outgoings more manageable. Adopting the Annual Accounting Scheme is also cheaper for business, by completing only one return a year instead of four will save businesses more than £100 annually.

The Annual Accounting Scheme is just one of several designed to help small businesses. The Cash Accounting Scheme allows businesses to pay VAT only when they receive payment from their customers, while the Flat Rate Scheme allows businesses to calculate their VAT by applying a flat rate percentage to their total turnover. Further details of the other schemes can be found on the HMRC website [http://www.hmrc.gov.uk]. Currently, only around 10,000 businesses participate in the Annual Accounting Scheme.