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VAT Retail schemes

Posted on 22 Apr 2016 by - VAT

Many businesses deal directly with the public and make supplies at one or more VAT rates. It would be impractical to keep records of every sale in order to calculate the VAT due to be paid to HM Revenue and Customs (HMRC).

The retail schemes provide methods of arriving at the value of sales chargeable at different VAT rates and therefore the ‘out put tax’ due. Retail scheme can only be used for retail sales hence businesses making non-retail sales have to account for VAT in the normal way.

Large retail businesses with a turnover in excess of £130 Million must use a scheme that is agreed with HMRC – this is then referred to as a bespoke scheme. There are essentially three types of retail scheme available to everyone else. The first is the point of sale scheme whereby the VAT due is calculated by identifying the nature of the goods sold at the time of the sale. For the smaller business this may entail using differently coded till buttons whilst larger businesses may employ point of sale (POS) technology such as bar code readers.

For further information and advice email vat@streetsweb.co.uk

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