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HMRC internal manual

VAT Retail schemes guidance

Bespoke retail schemes: general principles: Policy objectives and the law

Policy objectives

The policy objectives which underlie bespoke schemes are:

  • to increase certainty for both taxpayer and tax authority in VAT matters; and
  • to assist in the management of departmental and business resources.

Essentially, a bespoke scheme is a tailor-made agreement (albeit one which will often be based on one of the standard retail schemes) reached between a retail business and its local office, Customer Compliance  Manager or allocated officer.

The objective of certainty is potentially in conflict with the desire to ensure that the agreement contains enough flexibility to cater for unforeseen circumstances. But it is important to recognise that the more flexibility that is built into an agreement in order to cater for unforeseen circumstances, the less likely it is that these policy objectives will be met.

Information about what the policy team does and the circumstances in which you should contact us can be found in VRS1200.

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The law

The turnover restriction on the use of published retail schemes to businesses with a tax exclusive retail turnover below £130 million per annum is provided within tertiary legislation. Notice 727 VAT retail schemes and Notice 727/2 Bespoke retail schemes provide further information.

Retailers with an annual tax exclusive retail turnover of above £130 million who wish to use a retail scheme are required to agree a scheme individually with the Commissioners. Such schemes are called bespoke because, despite the fact that they will contain many common elements, they are tailored to suit individual businesses.