Paying the VAT

Businesses registered for 12 months, or more pay their VAT in nine monthly instalments of 10% of the previous year’s liability. Instalments paid at the end of 4-12 months of the current annual financial period.

Alternatively, such businesses may choose to pay their VAT, falling at the end of 4, 7, and 10, with 25% of the previous year’s liability in three quarterly instalments. The balance of VAT for the year then gives two returns together with VAT months after the annual accounting period. Businesses that have not registered for at least 12 months can still join the scheme, but each instalment based on a monthly or quarterly VAT liability estimate.

HMRC advises paying the instalment amount in all cases. The annual accounting period usually begins at the beginning of the applied quarter. If the application is made late in one quarter, it will start at the beginning of the next quarter. All businesses can use HMRC to change the level of instalments, whether the business increases or decreases.