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HMRC internal manual

VAT Retail schemes guidance

HM Revenue & Customs
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Mechanics of the standard retail schemes: Till shortages and excesses (unders and overs)


Most retailers reconcile their till roll reading with actual payments received. Even after making the required and allowable adjustments, retailers may discover there is a greater value of sales recorded on the till roll than there is money in the till. Such a situation is known as a till shortage or unders. If there is more money in the till than on the till roll, this is known as a till excess or overs.

General approach to unders and overs

Because till shortages are usually greater than excesses, retailers sometimes seek to reduce their record of DGT to take account of the difference. When this happens, your approach should be informed by the general principles at VRS4100. The starting point is that the DGT should reflect the true consideration for the supply: retailers are not allowed to reduce DGT simply because of poor cash control.

In most cases, the reason for any particular over or under will not be known and the extent to which you accept a business’s explanation is a matter of operational judgement. Subject to the guidance below, any adjustment must be evidenced in some way. An unevidenced adjustment is not acceptable.

The table at VRS4100 shows various types of error that lead to discrepancies, and the correct treatment for each type.


This is the most common situation. Remember, DGT is not simply a record of cash, but of all supplies as they are made (see VRS4050). Where the till record exceeds the actual amount of cash at the end of the day, the liability is established by the till record unless the retailer can persuade you that the actual amount of cash is more accurate. The burden of proof falls on the retailer.

However, where you are satisfied that the discrepancy arises from genuine operator error (as opposed to theft of cash), you may agree a set percentage of adjustments for till errors on the basis of a sampling exercise. If this is done, you must ensure that the size and frequency of the sample ensures a reasonable level of accuracy.


If the cash exceeds the recorded DGT, this may be evidence of unrecorded sales arising from operator error or suppression. The fact of such a discrepancy will be the starting point for enquiries: if you are not satisfied with the explanation you will need to consider further investigation or assessment.

Assessing for unders and overs

In principle, a best judgement assessment might be sustainable on whichever is the higher of cash or recorded DGT. Clearly, where the over is occasional and could plausibly balance unders in adjoining accounting periods, an assessment would not be reasonable. As a general rule, you will need to form a view on the reason for any discrepancy and be consistent about whether cash or the till roll is the more accurate and reliable record.

The following example may help to illustrate:

Month Adjusted till roll Cash
1 £100 £90
2 £110 £120
3 £150 £130
Total £360 £340

Where DGT has been based on cash as opposed to correctly using adjusted till roll figures, the figures should be read as producing a net shortfall of £20 and not the aggregate of the shortfall in months 1 and 3, £30.


Collusion occurs where a till operator and customer conspire so that the customer obtains goods without having paid the full price. Where the till operator puts some money in the till, that payment represents consideration received by the retailer for their supplies. However, where the till operator simply pockets the money given by the customer, there may be an exception to the last bullet point of general principles in VRS4100. If the business can demonstrate to your satisfaction that there has been collusion to deprive them of consideration, we accept that this can amount to a theft of goods from the retailer.

Further operational guidance

Inevitably these general guidelines will not be easily applied in every case. In cases of doubt or difficulty you may wish to contact the Retail UoE or VATAPPS Accounting Policy.