What is Annual Accounting Scheme?
The scheme permits you to complete one VAT return per year. VAT will be paid in instalments, to avoid VAT burden toward the end of end of the year. The purpose of this scheme is to lower the administrative burden on small scale businesses.
Significance of scheme:
- One VAT return per annum
- Providing benefit of cash as the instalments can be smaller than the larger quarterly payments
- Lengthy time limit for the submission of your annual VAT returns in two months.
Eligibility criteria for the scheme
Eligibility for scheme depends on amount of taxable supplies next year should not more than a certain level.
The taxable supply’s number is the total of your standard, reduced or zero-rated supplies which are excluded from VAT accounting. In this case, excepted provisions or sale of capital resources can be ignored. If you exceed the average value set for the scheme, providing the estimation was based on genuine grounds. Then the tax authority will not implement s penalty.
You may not get benefit from scheme if:
- In case you are already part of a VAT group or divisional registration
- In case you have not used in previous 12 months.
- you are having increase in VAT debt, unless it is less and have agreed with tax department to clear it
- you are in debt
How to Apply for Scheme
The application form along with direct debit mandate (if applicable) must be sent to the mentioned address of Tax authority. When joining the plan, the begin date will typically be from the earliest starting point of the VAT time frame in which the application to enter the plan has been made. Unless the application has been connected to later in the VAT return period, the procedure time frame denotes the section into the scheme.
The year of accounting can be modified by request, which move toward shorter period of VAT returns.
If you want to leave the annual scheme then notice must be delivered in written to the Annual Accounting Registration Unit.
Usage of Scheme
The pattern of the scheme permitted you to make up to 9 interim payments. Then remaining due amount is made along with the submission of the VAT return, right after 2 months after ending of VAT year.
10% of your last VAT returns liability will be paid in nine instalments. They will be paid in month 4 to month 12. The last payment will be submitted with the VAT return after two months of VAT year en that is month 14.
Quarterly based instalments can be requested, however general condition is monthly. Every quarter-based instalment will be almost 25% of the last year’s s VAT returns liability. Quarter based instalments will be paid from month 4, 7 and 10. The last payment should be submitted with the VAT return two months after the VAT year end, i.e. month 14.
Record keeping and administration
As for as record keeping is concerned, same rule will be implemented at VAT registered businesses. Further details Visit here – https://farahatco.com