Retail schemes ― overview

Produced by a Tolley Value Added Tax expert

Value Added Tax

Guidance

This guidance note provides an overview of the VAT retail schemes.

See also De Voil Indirect Tax V3.551–V3.576.

What are the retail schemes?

Retail schemes are intended to be used by businesses that cannot be expected to use the normal invoice accounting rules for supplies made (it would be impractical for a retailer to issue a tax invoice for every sale made). The scheme can only be used for retail sales. Retail schemes are usually used for low value supplies that are made to significant number of customers. If a business makes retail and non-retail sales, it will be expected to be able to identify both types of supply in order to account for VAT in the normal way on any non-retail supplies made.

Sales to other VAT registered customers should not be included in the a retail scheme, unless these are occasional cash sales, provided by businesses who may supply goods to VAT registered customers, such as garages and DIY stores.

There are various types of schemes in operation, which can be categorised

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