ACCA Applied Skills · Taxation (UK) · The effect of special schemes
Zed Ltd uses the Annual Accounting Scheme. Its estimated VAT liability for the year is £48,000. How much must Zed Ltd pay in interim payments, and how many are there?
Zed Ltd pays nine monthly interim payments, each 10% of the estimated annual VAT liability. That is 10% × £48,000 = £4,800 per month. The balance is settled with the annual return after the year ends.
- ANine monthly payments of £4,800 eachCorrect
- BThree quarterly payments of £14,400 each
- CNine monthly payments of £5,333 each
- DFour quarterly payments of £12,000 each
Explanation
Under the scheme, nine monthly interim payments are made, each equal to 10% of the estimated annual liability. 10% × £48,000 = £4,800. Quarterly payments of 25% are an alternative, but they are three payments of 25%, not four of 25%, and £14,400 is 30%, so options 2 and 4 are wrong.
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