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HMRC internal manual

VAT Retail schemes guidance

HM Revenue & Customs
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Fundamentals of the retail schemes: Retrospective change of retail schemes: Example questions when considering retrospection

The following questions are suggestions only. The list is not exhaustive and not all the questions will be appropriate in every case.

| The decision to choose the unwanted scheme | * What were the circumstances in which the scheme was chosen? * Why was it chosen? * Was the choice informed? * Did the business have the scheme notice? | || | The part played by HM Revenue & Customs | * Has the business been visited or been given an educational opportunity? * Has the choice of scheme been addressed in previous visits? * Is there evidence of misdirection? * Has advice about the choice of scheme been ignored? | | The extent of inaccuracy | * Can the business demonstrate that the preferred scheme produces a more accurate (and not just a lower) liability? What degree of inaccuracy is there? * What is the amount reclaimable under the proposed method? | | Mechanical considerations | * Are assumptions about mark-up etc. correct for the whole period of retrospection? * Are there records to support the recalculation? * Is the business adopting the retrospective scheme prospectively? * Was the business eligible to use the retrospective scheme throughout the period of retrospection? * Does the period of retrospection overlap a period of normal accounting? * Has retrospection been previously allowed for the same periods? |

In principle, these considerations will apply equally to registered and unregistered businesses. In practice, retrospection may be less suitable for deregistered businesses because of problems with evidence, records and the absence of any future chance to assure adjustments.

Note: These are guidelines only. Every case should be treated on its merits and any judgements informed by the considerations in VRS3465.