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HMRC internal manual

VAT Retail schemes guidance

HM Revenue & Customs
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Bespoke schemes: practical guidance: Assessment

If you consider that the method used does not produce a valuation which is a fair and reasonable statement of the liability for the period, you may assess to correct those elements of the proposed method which are precluding a fair and reasonable result. For example, your recalculation may be based on:

  • elements that are in dispute, such as daily gross takings or adjustments for expected selling prices; or
  • the correction of the concession on bounced cheques which is peculiar to retail schemes.

Such assessments must be made in best judgement following the principles set out in the VAT assessment and error correction manual (VAEC).

For information on raising assessments in other circumstances on businesses using retail schemes, see VRS3300.

Assessment for bounced cheques

The facility to adjust DGT for bounced cheques and credit cards inNotice 727/2 Bespoke Retail Schemes is a concession under the retail scheme regulations. In normal circumstances, the business would be obliged to account for output tax in the period in which the supply was made and to claim bad debt relief. If the business has not agreed a bespoke scheme, it may not take advantage of this concession: an assessment for bounced cheque adjustments on a best judgement basis will therefore make the liability reflect normal accounting more closely.