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HMRC internal manual

VAT Retail schemes guidance

Eligibility and refusal to allow use of a retail scheme: What is normal accounting?

For the purposes of a retail scheme, normal accounting means that the business establishes output tax liability without using a retail scheme.

It does not imply a requirement to issue a tax invoice for every supply since, under Regulation 16 of the VAT General Regulations 1995, retailers are not required to issue one, unless one is requested by a customer who is a taxable person.

Normal accounting records the value, rate and amount of VAT at line or transaction level. For example, a petrol receipt, and thus the retailer’s accounting system, may show the net, VAT and total amounts. This is normal accounting.

Examples of retailers who could perhaps be reasonably expected to use normal accounting are:

  • businesses supplying goods or services at one rate of tax - petrol retailers, furniture retailers, carpet retailers, jewellery retailers and retailers who sell electrical goods;
  • sales on credit terms;
  • sales by mail order; and
  • motor dealers/repairers.