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HMRC internal manual

VAT Retail schemes guidance

Eligibility and refusal to allow use of a retail scheme: What supplies can be included in a retail scheme?

The notices referred to in VRS1000 explain whether there are any restrictions on supplies of goods or services that can be accounted for under a particular scheme.

But there is also a general restriction, provided for in tertiary legislation in Notice 727 Retail schemes, that sales to other VAT registered businesses are not to be accounted for under a retail scheme. This requirement was upheld by the High Court in the case of Oxford, Swindon and Gloucester Co-operative Society Ltd [QB February 1995, [1995] STC 583]. The exception to this is for occasional cash sales such as a garage supplying petrol or a retail DIY store supplying building materials to a VAT registered customer. Sales on credit terms to such customers must be accounted for using normal accounting.