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HMRC internal manual

VAT Retail schemes guidance

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HM Revenue & Customs
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Eligibility and refusal to allow use of a retail scheme: The power to refuse use of a retail scheme: General

It is up to the retailer to choose a scheme. You cannot direct use of a particular scheme. The power of HMRC to refuse use is restricted to the three circumstances detailed in this section.

We are given discretion under Regulation 68 of the VAT Regulations 1995 [SI 1995/2518] to refuse use of a retail scheme in particular circumstances.

  1. The Commissioners may refuse to permit the value of taxable supplies to be determined in accordance with a scheme if it appears to them -

(a) that the use of any particular scheme does not produce a fair and reasonable valuation during any period,

(b) that it is necessary to do so for the protection of the revenue, or

(c) that the retailer could reasonably be expected to account for VAT in accordance with regulations made under paragraph 2(1) of Schedule 11 to the Act.

Historically, the power to refuse the use of a retail scheme under Regulation 68(c) of the VAT Regulations 1995 [SI 1995/2518] was rarely exercised. Our policy is that, where appropriate, the power should now be used more robustly to restrict use of retail schemes to those businesses that cannot reasonably be expected to account in the normal way.