These, as you can imagine, are for use in connection with retail supplies. Most VAT registered businesses take their output VAT from their sales invoices, but for retailers this is not practical due to the large number of sales made directly to the public. The retail schemes provide a way for businesses to determine their output VAT without having to invoice full VAT receipts to all their customers.
Cash Accounting Scheme
This basically involves accounting for your VAT when your invoices are actually paid (as opposed to using the tax point – which is usually the invoice date). This is only available for businesses with a turnover below a certain level.
Flat Rate VAT scheme
Under this scheme, the business may dispense with recording input VAT on each purchase, although the gross value of purchases must still be recorded. The business still charges VAT to it’s customers in the usual way, but he accounts for and pays over a lower figure to HMRC. The exact rate depends on the trade that the business is engaged in.
Annual Accounting Scheme
Again, this scheme is only available if the annual turnover is below a certain level. As the name suggests, businesses using this scheme account for their VAT on an annual basis, as opposed to quarterly.