New GST Accounting Schemes available for Businesses
1st February 2010
Two new GST accounting schemes, designed to help small business in the Island will come into force on 1 February 2010.
The Comptroller of Income Tax, Malcolm Campbell is pleased to introduce these new directions he commented: "Our aim is to simplify GST procedures whenever possible, and I am confident that these measures will greatly assist small businesses. I urge all those who qualify to apply as soon as possible."
Annual Accounting Scheme: The Annual Accounting Scheme will ease GST accounting requirements for smaller businesses. Those accepted will submit 1 GST return for each calendar year (instead of 4), and make 2 payments of GST to the Treasury (instead of 4).
It is estimated that up to 700 businesses with a taxable turnover of up to £500,000 could benefit from the scheme and they are urged to submit their application as soon as possible. The businesses will be asked to make an interim payment by 31 July each year, based on half the GST due from them the previous year, with the balance of tax due for payment required by the following 31 January, with the Annual GST Return. The first Annual GST Returns will be for 2010.
Cash Accounting Scheme: The second scheme, Cash Accounting, will allow businesses to account for GST on sales when they are paid. It's open to businesses with a taxable turnover of up to £1,000,000, and is particularly beneficial to businesses supplying services to the public, or where the average debtor period is greater than 70 days.
Those accepted on to the scheme will submit GST returns normally, but account for GST on the basis of payments received and made instead of invoices issued and received. It is not suitable for retail businesses, which already account for GST on sales when payment is received.
Consideration should be given to whether either of the above options are suitable for your business. It would be prudent to discuss these options with your accountant to ensure that the advantages outweigh any disadvantages.