The default scheme is the standard VAT scheme. With the standard scheme, businesses keep VAT details of their sales and purchases. You can then use the tracked information to complete a quarterly VAT return.
The annual accounting VAT scheme means that you will file a single annual return each year. Each quarter, you’ll make advance payments towards your estimated VAT bill which can help with budgeting. Businesses with an annual turnover greater £1.35 million are not eligible for this scheme.
The flat rate VAT scheme is open to businesses with an annual turnover <£150,000. Under this scheme, you pay a percentage of total turnover as VAT. This can be a simpler option for your business as it needs less detailed record keeping. The percentage paid is determined by your industry.