At what turnover amount must a business leave the annual accounting scheme?

The correct turnover threshold for a business to leave the annual accounting scheme is £1,600,000. This amount reflects the maximum allowable turnover for businesses wishing to continue using the scheme.

When a business exceeds this threshold, it is required to move to a different accounting scheme that better aligns with its increased volume of transactions and operational complexity. The annual accounting scheme is designed to simplify the VAT reporting processes for smaller businesses, and the turnover limit is established to ensure that it remains beneficial for those who qualify.

If a business exceeds the limit, it must switch to a more comprehensive VAT accounting method that can adequately manage the higher volume of transactions, ensuring compliance with tax regulations while also providing more detailed reporting. This mechanism helps to ensure that the VAT system operates effectively, adapting to the needs and capabilities of different-sized businesses.