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Monthly threat?
Key points
- HMRC has the right to allow and withdraw monthly VAT returns.
- Monthly submissions can help with a business’s cash flow.
- Late repayment returns will not result in a default surcharge but a notice will be issued.
- HMRC says it is not part of a wider policy to discourage monthly returns.
- Would clients be better off if they used the annual accounting scheme?
Here is an important question: when does a business submit monthly VAT returns? The answer is if the business is a ‘repayment trader’ that is its output tax is regularly less than input tax because the business mainly has zero-rated sales and the owner has asked HMRC for the monthly return option. The other situation is if the business is directed to do so by HMRC because of a past compliance problem and monthly returns are considered necessary to protect the revenue.
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