More than 35,000 recruitment and HR firms now eligible for simpler VAT

Around 35,000 recruitment and HR firms around the UK are now eligible for simpler VAT ñ only filing a single annual return, and paying their tax bill monthly.

From 1 April, businesses with a turnover up to 1.35 million are able to join the Annual Accounting VAT simplification scheme. More than one million businesses can now join the scheme, allowing them to spread their VAT payments throughout the year instead of grappling with a lump sum every quarter.

ìWe know a lot of businesses find a quarterly VAT bill difficult to manage in terms of cashflow, says John Brandwood of HM Revenue & Customs (HMRC). ìMembership of the Annual Accounting Scheme is designed to make those outgoings more manageable.î

ìAdopting the Annual Accounting Scheme is also cheaper for businesses ñ we estimate that completing only one return a year instead of four will save businesses more than 100 annually.î

Before 1 April, only businesses with a turnover up to 660,000 could join the scheme.

The Annual Accounting Scheme is just one of several designed to help small businesses. The Cash Accounting Scheme allows businesses to pay VAT only when they receive payment from their customers, while the Flat Rate Scheme allows businesses to calculate their VAT by applying a flat rate percentage to their total turnover.