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HMRC internal manual

VAT Retail schemes guidance

Fundamentals of the retail schemes: Ceasing use of a retail scheme

Regulation 72(1) of the VAT Regulations 1995 [SI 1995/2518] requires that:

72(1) A retailer shall notify the Commissioners before ceasing to account for VAT on the basis of taxable supplies valued in accordance with these regulations.

Notice 727 Retail schemes instructs retailers to contact their Business Advice Centre if:

  • they are intending to buy or sell part of a business;
  • the legal entity of their business is to change, from say a sole proprietor to a partnership; or
  • they are registered as a group and the composition of the group is to change.

In any case like this, you should consider the possible consequences of these changes on the retail scheme being used - both before and after the change takes place. You need to ensure that there is no threat to the revenue, whether deliberate or unintended.

The notice also details the general action to be taken, if any, on ceasing to use a particular retail scheme and points out that additional adjustments may be required where unusual patterns of trade prevent the scheme which has been used from producing a fair and reasonable result.

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

In such cases, you should seek to persuade the retailer to carry out any appropriate adjustments voluntarily but if, after having been given this opportunity, they are not prepared to do so, you may need to consider exercising the power to refuse use under Regulation 68 of the VAT Regulations 1995 [SI 1995/2518] for the protection of the revenue. VRS2350 refers.

Cases of doubt or difficulty should be discussed with the appropriate SO. In cases of continuing doubt, refer the case for further advice, following the instructions on the Indirect Tax Homepage.