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What are payments on account?

VAT registered businesses with an annual VAT liability of more than £2.3m are required to make payments on account (POA).

Under the POA regime, businesses make interim payments at the end of months two and three for each VAT return quarter. The interim payment is intended to cover part of the overall VAT liability for the VAT return quarter. The balancing payment for that quarters' VAT liability will be settled when the business submits its VAT return payment.

POA must be made electronically and the cleared funds reach HMRC's account by close of business on the due date (or on the last working day if that is earlier).

It should be noted that under VATA 1994, s 83 businesses have no right of appeal against being included