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HMRC internal manual

VAT Retail schemes guidance

Adaptations to standard retail schemes: Introduction and general policy


Regulation 67(1) of the VAT Regulations 1995 [SI 1995/2518] enables the Commissioners to permit a retailer’s output tax to be calculated by either:

  • a method agreed with the retailer; or
  • a method described in a notice.

Legislation provides for individually agreed retail scheme methods but we expect that, for the vast majority of retailers with a turnover below £130 million per annum there will be little genuine need for such methods. Bespoke schemes for smaller retailers will be the exception and will probably merely comprise adaptations to one of the standard published schemes. This section details some of the adaptations that may be requested by businesses, and the relevant policy view.

General policy regarding adaptations

Approval of adaptations must be conditional on retailers’ inability, rather than their unwillingness, to use a standard scheme or a mix of schemes. In seeking approval for an adaptation, a business must be able to satisfy you that a standard scheme is not operable in the context of their business and that the proposed adaptation will produce a fair and reasonable valuation of the standard and lower-rated supplies made.