Yes it is. With effect from 1st April 2006 the HMRC extended the thresholds for the “Annual Accounting” scheme for small businesses. It is now open to businesses with an annual turnover not expected to exceed £1.35 million (meaning you can join on initially registering for VAT), and can continue to use annual accounting whilst your turnover remains below £1.6 million. The lower turnover limit of £150,000 was removed, as was the 12 month time frame before you could register, so you can now join on applying for VAT registration.
Under the ‘Annual Accounting’ scheme, you only actually need to file one VAT return instead of four, and it will enable you to manage your cash flow with more certainty, as you are required to pay over a fixed amount of VAT per month. However, one scheme requirement is that these payments must be made be made electronically. It also gives you an extra month to complete and send in the annual VAT return and any balancing payment due. One disadvantage of the scheme is for businesses who regularly receive VAT refunds, you will only get one repayment per year.
To register for the Annual Accounting scheme you will need to send in an application to a VAT Registration Unit. For further information on the scheme and registering, you should speak to your local TaxAssist accountant.
By Jo Nockels
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