Other schemes

As well as the Flat Rate Scheme and the Annual Accounting Scheme there are alternative ways you can account for VAT that could save you time and money.

Some of these schemes have been designed for specific trade sectors while others have been designed to deal with more general business issues. Some of the schemes can be used together.

Cash Accounting Scheme

Using standard VAT accounting, you pay VAT on your sales whether or not your customer has paid you. Using cash accounting, you don't need to pay VAT until your customer has paid you. If your customer never pays you, you never have to pay the VAT. You can use cash accounting if your estimated VAT taxable turnover during the next tax year is not more than £1.35 million. You can continue to use cash accounting until your VAT taxable turnover exceeds £1.6 million.

For more information, search for 'VAT cash accounting' on the GOV.UK website.

VAT retail schemes

If you sell to the general public, especially high quantities of relatively inexpensive items, it can be difficult, time-consuming and costly to record the VAT on every individual sale in your accounts. Instead, if you use a VAT retail scheme - you don't need to record VAT separately in your accounts for each and every retail sale you make which can help simplify your retail VAT accounting. Any scheme you choose must, in the opinion of HM Revenue and Customs, give a fair and reasonable result in the amount of VAT paid.

For more information, search for 'VAT retail schemes' on the GOV.UK website.

VAT margin schemes

Margin schemes can save you money if you sell certain types of goods (second-hand goods, art, antiques etc) on which there was no VAT for you to reclaim because they duplicate the effect of standard VAT accounting. In other words, they allow you to pay VAT on the value you added to the goods, rather than on their full selling price.

For more information search for 'VAT margin schemes' on the GOV.UK website.