- Payments on Account Overview: Payments on account are advance VAT payments required by HMRC for businesses with an annual VAT liability exceeding £2.3 million. These payments are calculated based on previous VAT liabilities and reviewed quarterly for adjustments if liabilities change significantly.
- Payment Responsibilities and Schedules: Businesses must ensure payments are made on time to avoid penalties and interest. Payments on account are due on the last working day of the second and third months of each VAT quarter, with specific payment methods outlined for compliance.
- Alternatives and Adjustments: Businesses can opt for monthly VAT returns or pay actual monthly liabilities instead of payments on account. If VAT liabilities fall below the threshold, businesses may be removed from the payments on account arrangement after a specified period, and they can request adjustments if their liabilities decrease significantly.
Source gov.uk
