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HMRC internal manual

VAT Assessments and Error Correction

Section 73(1) and 73(2) assessments: Trader operates an eligible retail scheme

When a trader has operated an eligible retail scheme (which is unchanged before the end of the retail scheme year), base any assessment calculation on the correct application of the scheme used during the period covered by the assessments.

When you find that a trader who is eligible to use a scheme has correctly recorded gross takings but has made an error in the scheme calculation, make the assessment by correctly applying the trader’s chosen scheme.

In cases where it is found that some of the gross takings have been omitted from the records, make the assessment by applying the trader’s chosen scheme to the corrected gross takings figure.

When you decide to calculate a presumed gross takings figure under the criteria set out above and the recorded gross takings do not reflect the sales made, the assessment is to be based on a retail scheme

To apportion presumed gross takings, you should use any method that is required by the scheme to apportion the total gross takings.

When a scheme has been used for which the trader was not eligible, you should give the trader the opportunity, if adequate records are available, of selecting and applying retrospectively an acceptable scheme, for the relevant period(s).

If the trader decides to use another scheme, an assessment can only be raised against the newly selected scheme.

If a scheme for which the trader was eligible cannot be applied to the period(s) in question, the assessment must be the best approximation to the tax liability resulting from the normal VAT way of accounting for tax.

When, in your judgement, it provides the best approximation to the tax due under the normal provisions, you may use a method of calculation corresponding to that of a retail scheme.

If such a method is used, the assessment must not be expressed as based on a retail scheme, in case this is seen as a direction to use a scheme against the wishes of the trader.