VAT Break For Small Business
The government has announced plans to help millions of small businesses by offering a scheme to make VAT payments simpler.
Over a million small companies could benefit from a government scheme to ease VAT payments.
The Annual Accounting VAT simplification Scheme, devised by HM Revenue & Customs (HMRC), is available to businesses with a turnover up to £1.35 million from April 2006.
The threshold turnover for the scheme has been doubled (from £660,000) and instead of a lump sum every quarter, businesses will be able to spread VAT payments throughout the year.
"We know a lot of businesses find a quarterly VAT bill difficult to manage in terms of cashflow," says John Brandwood of HMRC.
"Adopting the Annual Accounting Scheme is also cheaper for businesses - we estimate that completing only one return a year instead of four will save businesses more than £100 annually."
Other schemes available to small businesses are the Cash Accounting Scheme (allowing businesses to pay VAT only when they receive payment from their customers) and the Flat Rate Scheme (which allows businesses to calculate their VAT by applying a flat rate percentage to their total turnover).
