1) Flat Rate Scheme

The Flat Rate Scheme was introduced in 2002 in order to assist small business account for VAT with less administration. Essentially, taxpayers only need to pay a percentage of their income with no VAT recovery on expenses (apart from a small number of exceptions). The purposes of the scheme is to reduce the 'red tape' and administrative burden on small businesses.

Although, the purpose of the scheme is not to save VAT, there are a number of instances when it would be more financially beneficial to move onto the flat rate scheme. HM Revenue & Customs have devised a 'Ready Reckoner' where you can calcuate an estimate of what you might save. Click here to view the 'Ready Reckoner' .

Customs have issued a booklet explaining the scheme (click here to view the booklet) There are a number of conditions for joining, maintaining eligibility and exiting the scheme, which can be confusing. If you would like more details on this, please email: advice@vatconsulting.co.uk

2) Cash Accounting Scheme

The Cash Accounting Scheme is a scheme where HM Revenue & Customs will allow you to account for VAT on a 'Cash received, Cash paid' basis. Normally, VAT is accounted for and claimed based on when sales invoices are issued and purchase invoices recieved.

However, it is accepted that customers may not pay their invoices on a timely basis and so, cause some cashflow problems.

There are some rules and conditions that apply to this scheme and if you would like to find out more, please email: advice@vatconsulting.co.uk

3) Annual Accounting Scheme

Taxpayers normally account for VAT every three months or if they are a refund trader, a monthly VAT return is permitted.

The annual accounting scheme allows a taxpayer to complete one VAT return covering the whole year. Every month an amount is paid on account and when the actual VAT return is completed, the balance is paid to or refunded by HM Revenue & Customs.

There are also specific special schemes for Tour Operators (TOMS) and various retail schemes for large traders. If you require specific advice on these, please email: advice@vatconsulting.co.uk