The 2012 worldwide VAT, GST and sales tax guide

I SLE OF MAN 329
Taxable persons that receive regular repayments of VAT may
re quest permission to submit monthly returns to improve cash
flow.
Returns must be submitted by the last day of the month following
the end of the return period. They may be submitted by mail or
electronically. Payment in full is also due by the same date.
However, taxable persons that pay their VAT return liabilities
electronically have an additional 7 days after the normal due date
to make payments.
VAT returns must be completed in pounds, but return liabilities
may be paid in pounds or in euros.
Payments on account. Taxable persons whose annual VAT liability
is greater than £2,300,000 must make payments on account,
which are interim payments made at the end of the second and
third months of each VAT quarter. The balance of VAT payable
for the period is made at the end of the quarter. The amount of the
payment is generally based on the taxable person’s VAT liability
for the preceding 12 months. Electronic transfers must be used
for all payments on account.
Cash accounting. Businesses with annual turnover of less than
£1,350,000 may apply to use cash accounting. Under the cash
accounting scheme, businesses account for output VAT and
reclaim input VAT on the basis of cash received and paid, rather
than on the basis of invoices issued and received.
Annual accounting. Businesses with annual turnover of less than
£1,350,000 may apply to complete an annual VAT return.
Businesses that use annual accounting must make either three
quarterly or nine monthly VAT payments, depending on the level
of turnover. Any balancing payment must be made with the
annual return. The annual return is due by the last day of the
second month following the end of the taxable person’s VAT year.
Special accounting. A flat-rate scheme exists for businesses with
an annual taxable turnover of less than £150,000. Under the
scheme, eligible businesses may opt to calculate VAT due based
on a fixed percentage of their total turnover. The percentages
range from 4% to 14.5%, depending on the trade sector of the
business.
Other special accounting schemes exist for retailers, including
second-hand goods retailers, tour operators, gold traders and
farmers.
Penalties for late submission and late payment. If a business with
a turnover of £150,000 or more submits a VAT return or payment
late, the taxable person is in default and is issued a Surcharge
Liability Notice. The surcharge liability period initially lasts for
12 months from the date of the notice. Any further default within
this period triggers a penalty and extends the notice period. The
penalty is a percentage of the VAT due.
The following are the percentage penalties:
• For the first further default in the notice period: a penalty of 2%
of the VAT due
• For the second further default in the notice period: a penalty of
5% of the VAT due