Eligibility and refusal to allow use of a retail scheme: Normal accounting versus the point of sale retail scheme
Technological advances in retailing enable greater use of the point of sale scheme. There will in some cases be very little, if any, difference between the amount of tax due under normal accounting and a point of sale scheme (perhaps only as a result of rounding); but the accounting systems themselves may well be different. For example, under normal accounting the system may record the net, VAT and gross amounts due on the supply; while under a point of sale scheme, the system may flag those supplies which are standard-rated without actually calculating the VAT due, the VAT fraction being applied to the total value of such supplies.
Retailers with a turnover of under £1 million are permitted to adjust their DGT for unpaid supplies without HMRC approval.
Retailers using direct calculation scheme 1 are permitted to mark up their majority goods, where it is simpler and will not produce any distortion, without prior HMRC approval.
Theft of cash is not an allowable reduction of DGT. If a retailer cannot reasonably be expected to use normal accounting, a point of sale scheme is the preferred alternative in our view. If worked correctly, this scheme is the most accurate and should be relatively simple to operate. This is likely to be more so where a retailer has an electronic point of sale (EPOS) system.