Notice

VAT Notice 727/2: bespoke retail schemes

Published 10 August 2011

Foreword

This notice cancels and replaces Notice 727/2 April 2011. Details of any changes to the previous version can be found in paragraph 1.1 of this notice.

1. Introduction

1.1 What is this notice about?

This notice explains how and when you may need to agree a bespoke scheme with us. It updates and replaces the April 2011 version. We have made changes to:

  • amend an incorrect address in the paragraph ‘Do you have any comments or suggestions’

1.2 Who should read this notice?

You should read this notice if:

  • you are a VAT registered business making retail sales
  • you are unable to account for VAT on those sales in the normal way (see paragraph 2.2) and
  • your annual VAT exclusive retail turnover exceeds £130 million

1.3 Further information

You should read this notice together with the other retail scheme information published in:

Notice 727: Retail schemes
Notice 727/3: How to work the Point of Sale scheme
Notice 727/4: How to work the Apportionment schemes
Notice 727/5: How to work the Direct Calculation schemes

This notice and others mentioned are available from our website at www.hmrc.gov.uk.

If you need any further help or advice, please contact our VAT Helpline on Telephone: 0300 200 3700.

The legal basis for these agreements is in regulations 66-75 of the Value Added Tax Regulations 1995 (S.I. 1995/2518). This notice explains how we will approach bespoke retail scheme agreements but is not in itself tertiary legislation under the regulations.

2. Basic information about bespoke retail schemes

2.1 What is a bespoke retail scheme?

A bespoke retail scheme is a method of determining output tax on retail sales made by large businesses which are:

  • ineligible to use the published retail schemes, and
  • unable to account normally

A bespoke scheme may be based to a greater or lesser extent on one of the published schemes, but will be tailored to meet your business needs.

2.2 Do I have to use a bespoke scheme?

No. If:

  • you do not wish to use a bespoke scheme, or
  • we can not agree your proposals for a bespoke scheme

You have the option to account normally.

Since you will be trading by way of retail, you will not need to issue a VAT invoice to customers who are not VAT registered. But you will need to be able to:

  • identify the VAT exclusive value and the amount of VAT for each sale, and
  • produce periodic totals of those amounts

2.3 When do I need to agree a bespoke scheme?

You may not continue to use any of the published retail schemes if your VAT exclusive retail turnover in the last 12 months has exceeded £130 million. You will need to contact us with your bespoke scheme proposals in plenty of time so that you can use your bespoke scheme from the first day on which you are ineligible to use the published schemes. Paragraph 4.1 tells you who you should contact about your bespoke scheme proposals.

It is important that you agree a bespoke scheme in good time because your only alternative, once you have exceeded the threshold, is normal accounting.

The start date of a bespoke scheme can only be backdated with the agreement of both parties.

2.4 What if my business sells to other VAT registered businesses?

You must account outside your bespoke scheme for the tax on any sales you make to other VAT registered businesses.

The only exception to this is incidental sales in the same form as you would make them to your customers who are not VAT registered, for example:

  • a garage supplying petrol to a VAT registered customer, or
  • a retail DIY store supplying building materials to a VAT registered builder

2.5 What if my business makes retail and non-retail sales?

You must only use your retail scheme to calculate the tax due on your retail sales. You must account for the tax on your non-retail sales using the normal method of accounting (see paragraph 2.2).

2.6 What if I use the Internet to make retail sales?

If you use the Internet to make retail sales in the UK, your record of those sales will usually be sufficient to allow you to account for the VAT on them normally.

However, if we are satisfied that you are not able to account normally for the VAT on these sales, we may agree that you can include them in your bespoke scheme.

3. Key elements of a bespoke agreement

3.1 What will my bespoke agreement be based on?

A bespoke agreement will usually be based on one of the published schemes, but it can be based on any method which meets the tests listed in paragraph 4.2. It may include a mixture of different schemes to cover various circumstances or various parts of your business, but we are unlikely to agree proposals for an agreement that are based on, Apportionment Scheme 1 or Direct Calculation Scheme 1.

3.2 What supplies will my bespoke agreement cover?

Bespoke agreements usually cover all the retail supplies a business makes:

If then
some of your retail supplies are not to be included, or

your agreement will include retail sales made by members of the same VAT group
you should make that clear in the body of your agreement

3.3 What will my bespoke agreement include?

Your bespoke retail agreement will:

  • include the start date. If both parties agree, it may also contain an end date
  • specify how output tax will be calculated in any period between the date of the agreement and the date at which your business became ineligible to use a published scheme
  • include details of those supplies which will be accounted for within the scheme, and of those which will not form part of the scheme and will therefore be accounted for normally (see paragraph 2.2)
  • any items in the DGT tables at section 7 and appropriate to your method of valuing taxable retail supplies (see sections 8 and 9). The tables are only a guide. Any special circumstances or transactions not included in the tables should still be covered in the agreement, and
  • the name, status and signature of one of our officers, and of an authorised signatory of your business

3.4 Is there a model bespoke agreement?

No. Every bespoke agreement is tailored to suit a particular business so there is too wide a range of possible agreements for us to be able to provide a model.

However, there is a framework at Appendix A that provides a clear explanation of the scope and effect of a bespoke retail scheme agreement. You may find that you save time if you start from that framework but you do not have to use it. However, you should bear in mind that an agreement which does not contain an explicit framework of this nature is unlikely to provide you with complete certainty about your retail VAT declarations.

3.5 Will the agreement need to be renewed every year?

No. We have withdrawn the requirement for agreements to be reviewed and renewed annually.

Instead, each new agreement should contain a clause stating that it will remain in effect until:

  • both parties agree it should cease
  • either party gives written notice that it is no longer bound by it or
  • a fundamental flaw is discovered in it

A fundamental flaw is one that prevents the objectives of your bespoke agreement from being fulfilled.

If both parties agree that your scheme is fundamentally flawed, we will treat the scheme as invalid from the date the flaw first existed. We expect such cases to be rare.

If then
the calculation method used in the scheme incorporates adjustments at the end of each year and

the scheme is closed early
You must make the equivalent of your usual annual adjustment calculation at the point of closure.

3.5.1 What if my existing agreement includes annual reviews?

If you no longer wish to be bound by the annual review clause in your agreement, you can ask your Customer Relationship Manager (CRM) or your allocated officer about agreeing an amendment. The process of making that amendment will depend on what your existing agreement says about making changes to your scheme.

  • if a bespoke retail scheme has not been agreed, a business with annual retail sales in excess of £130 million must account normally
  • retail schemes exist to make it easier for retailers to account for VAT. No retail scheme can amend the normal provisions of VAT law further than is strictly needed to simplify the valuation of output tax on retail supplies
  • both parties enter a bespoke scheme agreement on the basis of full disclosure of the relevant facts
  • both parties confirm, by signing the agreement, that they believe it produces a fair and reasonable result
  • you agree to tell us about any significant change in your business structure or accounting processes

4. Agreeing your bespoke scheme with us

4.1 Who do I contact to agree a scheme?

If then
we have appointed one of our officers as your CRM, or

you have an allocated officer with whom you deal regularly,
you should contact him or her in the first instance.
You don’t have a CRM or an allocated officer You should contact our VAT Helpline. You can do this by phone on Telephone: 0300 200 3700, or you can send an e-mail or a letter. You can find the e-mail or postal address by clicking on the ‘contact us’ button in the top right hand corner of our website at www.hmrc.gov.uk

4.2 When would HMRC withhold agreement to a bespoke scheme?

We recognise that some large retailers could have difficulties in accounting normally, so we will only withhold agreement to a bespoke scheme for the reasons in regulation 68 of the VAT Regulations 1995:

  • it does not produce a fair and reasonable result
  • refusal to use the scheme is necessary for the protection of the revenue or
  • you could reasonable be expected to account normally

4.3 What do you mean by fair and reasonable?

We judge the fairness of a scheme on its ability to approximate the amount of output tax that would be due under normal accounting, but see 4.4 below.

We judge the reasonableness of a scheme on how simple it is for you to use and for us to check.

A scheme that:

  • does not reflect commercial reality or
  • unnecessarily complicates either your own accounting or our ability to audit your VAT declarations

Is unlikely to be fair or reasonable.

4.4 What if there is more than one ‘fair and reasonable’ method?

We recognise that, in a large and complex business, there may be various methods of calculating the VAT due, many of which could be defined as fair and reasonable.

However, when two methods produce different amounts of VAT, it will often be possible to identify which of them more closely approximates the declaration that would be produced using normal accounting. In such cases we may, for the protection of the revenue, refuse, or withdraw our agreement to, a method that is in principle fair and reasonable.

4.5 What if there are some elements that can not be agreed?

After we have received your bespoke retail scheme proposals and discussed them with you, there may be one or more minor matters on which we can not reach agreement. If that happens, we will formally agree the undisputed elements with you. This means that you will be able to use your bespoke retail scheme agreement to account for VAT on the majority of your retail sales.

We will carry on negotiating the disputed elements of your proposals with you until both parties are content. As that happens, we will formally agree further modules of your bespoke retail scheme.

You should bear in mind that, as long as your scheme has elements that have not been agreed by us, you won’t be certain that you have accounted for the correct amount of VAT. Once the minor issues have been resolved, your declarations should usually be adjusted from the start date of the scheme. In some cases however, we may agree to make the changes from the current date.

4.6 What if I am not satisfied with the negotiations?

If you are not satisfied with the way in which your bespoke scheme negotiations are being conducted then:

If you have been negotiating with your then
Tax Specialist and a CRM is allocated to your business please discuss the issue with your CRM
CRM and you are within HMRC’s Large Business Service please contact your Sector Lead as detailed on the HMRC website
CRM and you are within HMRC’s Local Compliance Service please contact their Team Leader

5. Changing your bespoke agreement

5.1 What if my business changes?

If we have agreed a bespoke scheme with you, we will have made it in the context of a full disclosure of your business structure and trading patterns at that time.

So it’s important that you tell us immediately about any changes that could affect the fairness or reasonableness of the scheme.

If you don’t tell us about a significant change in your business or your accounting processes, you risk:

  • being assessed for the output tax you owe as a result of that change or even,
  • having your use of the scheme invalidated altogether and having to account for VAT normally from the date of the change

A significant change can be any:

  • single change or
  • accumulation of changes

that prevents your bespoke agreement from continuing to produce a fair and reasonable result.

5.2 What if I want to change my bespoke scheme?

In principle, as long as both parties agree, a bespoke scheme can change at any time. We would not normally expect any changes to take place from a date before the one on which the change or review was requested.

Part of the agreement can be reviewed without invalidating the agreement as a whole.

If then
a review is going to take place, and

both parties agree that the agreement should continue while the review is carried out
They need to specify in advance whether the results of the review will be implemented from:

the date the review was requested, or the date the review is completed

Such an agreement can not overturn the normal rules on capping

If you are varying or reviewing your bespoke agreement, you should record the date on which any change happens. You can do this

  • in the agreement itself or
  • in correspondence that makes explicit reference to a variation or review

5.3 What if you want to change my bespoke scheme?

We may withdraw our agreement and refuse the use of a previously agreed scheme for any of the reasons provided for in regulation 68 of the VAT Regulations 1995:

  • it no longer provides a fair and reasonable result
  • refusal to use the scheme is necessary for the protection of the revenue or
  • you could reasonably be expected to account normally

For example, we may withdraw our agreement if we discover that:

  • it was not based on a full disclosure of your business circumstances or
  • another method of calculation would produce a result closer to that which would be produced by accounting normally (see 4.4)

If we do this, we will let you know which aspects of the current agreement we find unacceptable. If you still want to use a bespoke scheme, you will need to send new proposals for us to consider.

6. Details of a bespoke agreement - daily gross takings

6.1 How do I determine my daily gross takings (DGT)?

The table below provides guidance on the sorts of details about your DGT that should be included in your bespoke agreement. The list is not exhaustive. Any special circumstances or transactions not included in the list below must still be covered in your agreement.

You can find further guidance on adjustments to your DGT at paragraph 6.2.

Guidance on the sorts of details about your DGT which should be included in your bespoke agreement

How DGT is arrived at Specify where the DGT figure comes from, for example till roll, EPOS (Electronic Point of Sale) system.

The DGT will be the value of all sales which should be recorded by the EPOS system, not simply the EPOS figure.

Note: Cash-back and customers’ donations to charities (e.g. Comic Relief) that you collect are a non-supply so must be excluded from any takings or bad debt adjustments.
Tills Specify the method for controlling tills outside the main system, e.g. temporary, remote or manual tills and those sited in concessionaires.
Till breakdowns Specify what method will be used for the treatment of takings should a till break down, and the way in which DGT will be calculated.
Deliveries direct to customer (e.g. Internet or mail order sales) Specify how these sales will be accounted for within the DGT if the sale has not been processed via a till. (But see 2.6 about accounting for VAT on Internet sales.)
Other currency accepted Specify how this will be converted to pounds sterling (GBP).

Note: any additional amount charged as a fee to convert to GBP is a further consideration for the main supply.
Concessions Specify how these will be accounted for.
Roundings Within the scheme the VAT due will normally be based on the VAT fraction applied to total considerations in a period. However, if rounding is to be applied at any other point then this should be discussed during negotiations and it should not result in:

a discrepancy between the VAT charged to customers and the VAT that is paid to HMRC

nil VAT on positive rated items

rounding down of all VAT payable in every calculation.

6.2 Adjustments to Daily Gross Takings (DGT)

You must specify in your agreement how the following adjustments to your DGT will be dealt with:

Agency supplies When you make sales as an agent, your commission should be dealt with outside the DGT.
Barter Specify how barter transactions are valued in the DGT. Notice 700 The VAT Guide provides guidance on this type of transaction.
Deposits Most deposits serve primarily as advance payments and must be included in your DGT for the date on which you receive them, see Notice 700 The VAT Guide.
Dishonoured or unsigned cheques and debit cards You may only reduce your DGT for such items where they are consideration for sales that have been included within the scheme (DGT).

Note: it is important to specify how taxable takings will be adjusted in relation to “cash-back” payments, exempt warranties etc.
Foreign coins You may reduce your DGT where you inadvertently accept foreign currency.

Note: this does not apply if a credit is subsequently received as reimbursement from your bank.
Forged bank notes You may reduce your DGT where you have inadvertently accepted a forged bank note as payment for a taxable supply.
Manufacturer-led vouchers For information on the treatment of vouchers and other special offers, see paragraph 7.2. If you accept vouchers for which you receive payment from a third party as a result of your participation in a customer loyalty scheme, you should specify how you intend to account for such payments.
Non-retail sales Specify what method is used to exclude any money paid into the till for such supplies from the DGT for the retail scheme.

Note: bulk disposal of stock should be dealt with outside the retail scheme.
Out-of-date manufacturers’ vouchers /coupons See the entry titled “Out-of-date manufacturers’ vouchers” in the table at paragraph 7.2.
Outside the scope and exempt sales You must account for any commission for the sale of items such as postage stamps and lottery tickets outside your retail scheme.

You will also need to ensure that you can identify lottery tickets printed by non-lottery tills and exclude payment for such from DGT.

For further information on National Lottery activities please refer to Notice 706 Partial Exemption and Notice 706/2 Capital Goods Scheme.
Overs and shorts Adjustments to “cash” takings when they do not agree with the till or Electronic Point of Sale (EPOS) figure, and overs and shorts in cash received and bankings.

Note: adjustments must not be made for theft of cash or poor cash control that results in over changing or acceptance of insufficient tender.
Part exchange Specify how part exchange transactions are valued in the DGT. Notice 700 The VAT Guide gives guidance on this type of transaction.
Price match guarantee Specify how price match guarantees will be adjusted.
Private use of purchases When goods are taken for private use or given away, specify how these are brought into the DGT.
Refunds Specify how refunds are treated and evidenced. If you make a refund, you may deduct the amount refunded or credited to customers in respect of taxable sales of goods or services from your DGT to a maximum of the amount originally charged.

Note: false refunds i.e. to address theft of cash or stolen goods fraudulently returned by customers are not related to a genuine supply so no DGT reduction is appropriate.
Goodwill payments Goodwill payments are additional to any refund made, and as such are outside the scope of VAT. They do not form part of your DGT and therefore cannot be deducted from your DGT calculations.
Services If your scheme is based on Direct Calculation or Apportionment, then income from supplies of services needs to be deducted from your DGT.
Sales of second hand goods under the Margin Scheme Your takings from the sale of second hand goods must be distinguishable, and must be excluded from your DGT. The tax due on these sales must be identified and accounted for outside your retail scheme.

You can find more information about record keeping requirements under the scheme at Notice 718 The VAT Margin Scheme and Global Accounting.
Self-financed credit Specify how the DGT will be adjusted for any exempt interest charges and payment protection etc.
Staff discounts and other promotions Many discount schemes, including those for staff, restrict availability to certain supplies. Petrol, tobacco, food, etc are often excluded. It is important to consider this when determining how discounts are to be taken account of under your bespoke scheme.
Voids Specify what your policy is for control and adjustment of voids.
Warranties/ Guarantees Specify whether any such warranties/guarantees are taxable and how they will be dealt with. Notice 701/36 Insurance gives further guidance. Where there are implications for partial exemption, please also refer to Notice 706 Partial exemption.

6.3 Can I estimate my DGT adjustments?

We understand that calculating DGT adjustments accurately requires a lot of resource. We may therefore allow you to estimate your adjustments as long as:

  • we agree that your proposed estimated adjustment is based on reliable evidence and
  • the basis for your estimated adjustment is regularly reviewed

7. Details of a bespoke agreement using the point of sale method

7.1 What if I am using a point of sale scheme?

The table below provides guidance on details that should be included in your agreement if your bespoke scheme is based on the point of sale scheme. The list is not exhaustive and any special circumstances or transactions not included in the list must still be covered in your agreement. (Vouchers and other special offers are covered separately at paragraph 7.2)

Guidance on details that should be included in your agreement

Mixed rate products Specify how products will be coded and how tax due will be calculated, including composite supplies of different rated products where supplied as a single package, e.g. meal deals.
Non-Electronic Point of Sale (EPOS) departments Specify how goods will be identified if sold through departments that do not have EPOS equipment such as specialist greengrocery, fish, or meat.
Private use of purchases When goods are accounted for private use or given away, specify how any tax due will be accounted for.
Product VAT coding Specify at what level you will apply VAT coding:

line

product or

department
Refunds When a refund is made, specify how the returned product will be re-scanned or, if it is not, state how the refund will be allocated to the correct VAT rate.
Remote tills If certain tills are not connected to an EPOS system, specify how tax will be accounted for on these sales. Also, state how takings will be dealt with from remote tills sited in concessionaires.
Staff discounts Specify how staff discounts will be attributed between the different VAT rates.
Till breakdowns In the event of a till breakdown, specify how takings will be split between VAT rates.
Unscanned products If certain products are not scanned, or fail scanning, specify how they will be accounted for.
VAT code errors Specify how adjustments will be made when errors are found in the application of VAT codes within the product file.
VAT coding Specify the policy for setting VAT liabilities and for controlling and recording changes and the system that will be used to check the accuracy of this process.

List available VAT codes and their meanings (e.g. S=standard rate, Z=zero-rate etc.), together with the frequency with which codes change, and undertake to produce product file on request.

7.2 What about vouchers and other special offers?

You must specify in your agreement how you intend to treat the following vouchers and special offers:

Discount vouchers When customers redeem “general” money-off vouchers such as “£2.00 off when you spend £20” (that is, the vouchers are neither product- nor supplier-specific), specify how the discount is to be allocated between the VAT rates.
Multi-saves When goods are offered as, for example,”3 for the price of 2”, or “£1 off when you buy 3”, specify how these will be accounted for.
Out-of-date manufacturers’ vouchers If the manufacturer refuses to honour the voucher, specify how the DGT will be reduced and allocated between the VAT rates.
Own product vouchers Where a discount voucher is issued in-store on specific products, specify how this will be allocated to the correct VAT rate.
Retailer Vouchers within VATA 94 Schedule 10A (Face value vouchers / credit vouchers and other vouchers) Specify how you will treat the consideration you receive both when selling and on redeeming these vouchers.
Special offer prices / price reductions When goods are reduced in price and a special sticker is placed over the bar code, can EPOS still be used? Specify how these products will be accounted for if it is necessary to account for them outside the EPOS system.

General guidelines on the business promotion schemes covered in this section are provided in Notice 700/7 Business promotion schemes.

8. Details of a bespoke agreement using expected selling prices

8.1 What if I am using an expected selling prices scheme?

If your bespoke scheme involves the calculation of expected selling prices (ESPs), the table below provides guidance on the sorts of general details that should be included in your bespoke agreement.

The list is not exhaustive and any special circumstances or transactions not included in it must still be covered in your agreement. Guidance on adjustments to ESPs and on trading patterns is included at paragraphs 8.2 and 8.3).

Guidance on the sorts of general details that should be included in your bespoke agreement

Basis of setting ESPs Specify how ESPs are calculated. Make reference to any built-in allowances, tolerances and/or regional variances, etc.
Direct deliveries to customers Where goods are delivered direct from supplier to customer, specify how these will be brought into the ESP calculation.
Mixed rate products Specify how these products will be coded and how the tax due will be calculated, including composite supplies of products at different rates where supplied as a single package e.g. meal deal.
Point of receipt of goods into the scheme The setting of ESPs should be as close to the point of retail sale as possible, thus providing the most accurate valuation of taxable retail sales.

Any attempt to move the point of receipt of goods into the scheme further away from the point of retail sale will not normally receive approval by us because it is likely to produce a valuation that is less than fair and reasonable.

While goods are in a Customs “Type E” warehouse they are excluded from any retail scheme calculation and are outside the scope of UK VAT.

Note: All goods sold within warehouses to other VAT registered traders must be accounted for outside the scheme.
Product VAT coding Specify at what level you will apply VAT coding to the goods you receive for resale:

line

product or

department
Scheme and level of calculation Specify:

the level at which the scheme will operate, for example-business, store or department.

Note: there must be a record of how goods are separated within each area, and how they are transferred from one area to another for the purposes of the scheme calculation.

the level of expected accuracy of the ratio to be applied to the DGT under an apportionment scheme.

Note: If more than a single step calculation is to be used (that is, the ratio percentage is calculated and that percentage then applied to DGT) we will not accept the percentage calculation to less than 4 decimal places.
Services As services cannot be accounted for within either Direct Calculation or Apportionment schemes, specify how the tax on standard-rated services will be brought to account.
VAT code errors Where errors are made on VAT codes, specify how the value of the goods incorrectly coded will be quantified and how any VAT misdeclared will be calculated.

Note: State what the treatment of errors found in both Direct Calculation and Apportionment schemes will be.
VAT coding Specify the policy for setting VAT liabilities and for controlling and recording changes and the system that will be used to check the accuracy of this process.

List available VAT codes and their meanings (e.g. S=standard rate, Z=zero rate, etc.), together with the frequency with which codes change, and undertake to produce product file on request.

8.2 What should be specified in my agreement about adjustments to my Expected Selling Prices (ESPs)?

You must specify how, within a direct calculation or apportionment method, you will deal with the following adjustments:

  • wastage
  • theft
  • leakage
  • multi-saves
  • price changes
  • sell-by date reductions
  • staff discounts
  • transfers
  • freezer breakdowns
  • insurance claims
  • goods given away
  • goods for own use
  • non-retail sales
  • own product specific vouchers
  • own discount vouchers
  • refunds
  • bounced cheques/bad cheques

If these adjustments are not taken into account, we consider that the scheme is unlikely to produce a fair and reasonable valuation.

8.3 What should my agreement specify about trading patterns in relation to my ESPs?

You must specify how the following will be dealt with in relation to your expected selling prices:

Period of calculation You should make every effort to equalise trading patterns. One way would be to use an extra-long period of calculation, which would include a year-end adjustment, so that a fair and reasonable valuation of taxable retail sales is achieved.
Stock adjustments Including your opening and closing stock adjustments will help to establish an accurate pattern of trading. You should include all stock acquired during the period, such as via the transfer of a going concern, in your opening stock figure.

This may be done on a period or yearly basis. An adjustment should always be made in the case of closing stock when a business, or part of a business,

is transferred as a going concern

ceases to trade or

when changes are made to one or more ESP specific aspects of a bespoke scheme.

Stock values should be identified as either actual or book values and the agreement should identify how the stock values at different rates are arrived at.
Rolling periods Using ESPs from the four quarterly or twelve monthly previous consecutive periods to calculate a percentage ratio for an Apportionment scheme will help to produce an accurate trading pattern.
Exclusion of distortive factors You will need our agreement to your proposed treatment of large quantities of goods taken into stock from store take-over, or the sudden purchase of bulk stock.

Your rights and obligations

Your Charter explains what you can expect from us and what we can expect from you. For more information go to Your Charter.

Do you have any comments or suggestions?

If you have any comments or suggestions to make about this notice, please write to:

HMRC
VAT Directorate
VATAPPS Accounting Policy
1 NW Queens Dock
Liverpool
L74 4AA

Please note this address is not for general enquiries.

For your general enquiries please phone our Helpline Telephone: 0300 200 3700.

Putting things right

If you are not satisfied with our service, please let the person dealing with your affairs know what is wrong. We will work as quickly as possible to put things right and settle your complaint. If you are still unhappy, ask for your complaint to be referred to the Complaints Manager.

For more information about our complaints procedures go to www.hmrc.gov.uk and under quick links select Complaints.

How we use your information

HMRC is a Data Controller under the Data Protection Act 1998. We hold information for the purposes specified in our notification to the Information Commissioner, including the assessment and collection of tax and duties, the payment of benefits and the prevention and detection of crime, and may use this information for any of them.

We may get information about you from others, or we may give information to them. If we do, it will only be as the law permits to:

  • check the accuracy of information
  • prevent or detect crime
  • protect public funds

We may check information we receive about you with what is already in our records. This can include information provided by you, as well as by others, such as other government departments or agencies and overseas tax and customs authorities. We will not give information to anyone outside HMRC unless the law permits us to do so. For more information go to www.hmrc.gov.uk and look for Data Protection Act within the Search facility.

Appendix A - model framework for a bespoke retail scheme

1. Introduction

1.1 This is an agreement between HMRC and Retail Ltd. The purpose of this agreement is to determine the value of retail output tax where a retailer is unable to account for VAT normally.

2. Scope of this agreement

2.1 This agreement covers the retail supplies made by Retail Ltd (VAT registration 123 4567 89) (and by the members of the VAT Group listed in an annexe to this agreement).

2.2 The agreement begins on [date] and will remain the basis for retail accounting until or unless one of the events in section 4 occurs.

2.3 The methods of retail accounting described in the annexes to this agreement constitute a scheme agreed under Regulation 67 of the VAT Regulations 1995. The signature of an officer of HMRC on this document constitutes permission to use this scheme.

2.4 The terms of this agreement do not amend the normal provisions of VAT law except to the extent necessary to simplify the valuation of output tax on retail supplies.

3. Basis of this agreement

3.1 In the absence of an agreed retail scheme, Retail Ltd is required, by law, to account normally.

3.2 Both parties enter this agreement on the basis of a full disclosure of the relevant facts.

3.3 The signing of this agreement is confirmation that both parties consider the scheme of retail accounting produces a fair and reasonable result.

3.4 Retail Ltd will notify HMRC of any significant change in business structure, activities or accounting processes. Significant change in this context is any single change or any accumulation of changes, which impact on the scheme’s accuracy or its ability to produce a fair and reasonable result.

4. Cessation or variation of agreement

4.1 Cessation: This agreement will continue in force until or unless any of the following occur:

a: Both parties agree to its cessation. Such agreement will usually be prospective but may be retrospective if both parties agree.

b: Either party gives written notice that it is no longer bound by the agreement.

Such unilateral termination will be prospective. Any notice to that effect given by HMRC will:

  • take effect no earlier than the start of the VAT accounting period, which begins after the date of the notice
  • be given only for one of the reasons in regulation 68

c: On the identification of a fundamental flaw, which indicates either that the agreed scheme was entered into on a basis inconsistent with section 3 or that it has a pretended scope beyond that described in section 2. Subject to the normal rules on capping and the rights of both parties to contest the existence of a fundamental flaw, the scheme will be treated as invalid from the time the fundamental flaw came into existence.

4.2 Variation: Where the parties agree, individual components of this agreement may be altered prospectively without invalidating the agreement as a whole. The fact of such variation must be evidenced by amendment to this agreement or in correspondence referring explicitly to a variation of this agreement.

4.3 Either party may request a review of part of the agreement, without invalidating the whole of the scheme. If both parties agree to continue the scheme pending such a review, either party may, by written notice, reserve the right to apply the treatment that results from the review from the date the review was requested, subject to the normal rules on capping.

5. Disputes and omissions

5.1 In the event of a disagreement about the meaning or effect of the terms of the scheme, the normal VAT treatment will determine the meaning or effect of the term.

5.2 In the event of a declaratory judgment by the court, which indicates that either party has proceeded on a mistake about a significant feature of the scheme, that party shall be entitled to correct the scheme retrospectively, subject to the normal rules on capping.

5.3 In the event of a dispute about the meaning or effect of a term, the agreement may, nevertheless, continue in force if the parties so agree. Where both parties agree to continue the scheme pending resolution of a dispute, either party may, by written notice, reserve the right to apply the correct treatment from the date of the notice, subject to the normal rules on capping.

5.4 In the event of a significant omission from the terms of this agreement, or of a failure to notify a significant change under 3.4, either party shall be entitled to correct the error retrospectively, subject to the normal rules on capping. A significant omission in this context is an omission that results in a material inaccuracy or prevents the scheme from producing a fair and reasonable result.

List of annexes attached

Signature of parties

Date