VAT registered businesses with an annual VAT liability of more than £2.3 million are required to make payments on account (POA) to HMRC. HMRC’s Notice 700/60 VAT Payments on Account explains how making payments on account works.

VAT registered businesses become liable to make POA’s where:

1. Quarterly VAT returns are submitted to HMRC
2. Total liability exceeds £2.3m a year.

The £2.3 million includes VAT on imports and goods ex-warehouse.

Businesses that are liable to make POA’s are required to pay 1/24th of their estimated annual liability to HMRC in the second and third months of the VAT quarter, with a balancing payment submitted with quarterly VAT return.

The payments on account and the balancing payments, must be made electronically and cleared funds must be in HMRC’s bank account by close of business on the due date.

Source: New feed