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HMRC internal manual

VAT Retail schemes guidance

Special arrangements for certain professions or trades: Christmas hampers

Businesses that supply, for example, Christmas hampers, may either buy in ready-made hampers or make up their own, perhaps from items they already sell individually. Some businesses may, however, run a separate operation retailing hampers whereby they receive periodic payments over the course of a year with the hamper actually being supplied once all payments have been received. The periodic payments are usually advance payments for the supply of the hamper and therefore create a tax point in their own right. As such, they should be included in the DGT at the time of receipt.

In some cases, there may be few actual purchases during the course of the year of the goods to be included in the hamper: this may cause problems in using a retail scheme that will produce a fair and reasonable result.

One option may be to agree with the trader to use the previous year’s (or season’s) catalogue to agree an overall standard-rated percentage to be applied on a provisional basis to the current year’s catalogue hamper sales. At the year-end, this can then be reviewed against the actual standard-rated split of the hampers supplied and any adjustment then brought to account.