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HMRC internal manual

VAT Retail schemes guidance

Expected selling price (ESP) schemes: General

If a point of sale scheme cannot be used, a scheme that is dependent on the calculation of expected selling prices (ESPs), with some sort of rolling calculation or annual adjustment to even out any seasonal patterns of sales or purchases, is considered to be the next most accurate scheme for large retailers. Any scheme proposal using ESPs is expected to be based on either an apportionment or direct calculation method and guidance on how to work these methods is given in


ESP schemes will only provide a result where ESPs are set and adjusted as per VRS4550, VRS4600 and VRS4650. We accept that where the business can prove that there is no material effect on the tax calculation by not making the full range of ESP adjustments, or that tax will be reduced if they do so, there should be no compulsion under an apportionment scheme on the business to do so. Nevertheless, there is a need to record this within a bespoke scheme agreement so that there is no attempt, at a later date, to include adjustments that may reduce tax. When calculating zero rate ESPs under a direct calculation method, the adjustments will invariably have a direct effect on the tax due and should normally be taken into account to the most accurate level possible.