VAT Retail Schemes

If you sell goods you must calculate how much VAT to record in your VAT account. 

For goods sold inclusive of VAT, you must deduct the VAT you have to record. For goods sold exclusive of VAT, you must add it. 

VAT retail schemes can make calculating your VAT simpler. Instead of calculating the VAT for each sale you make, you do it once with each VAT return. 

There are three standard VAT retail schemes: 

If your turnover excluding VAT is over £130 million you must agree a bespoke retail scheme (external link) with HM Revenue and Customs (HMRC). 

You can use a retail scheme together with the Cash Accounting Scheme (external link) and the Annual Accounting Scheme (external link)

You cannot use retail schemes with the Flat Rate Scheme (external link).  

Joining and Using a Scheme 

You can join a retail scheme at the beginning of any VAT period. You do not need to tell HMRC. 

It is up to you which scheme you join. The calculations you have to do vary for each scheme.  

You must provide an individual VAT invoice (external link) if a customer asks for one. 

Changing and Leaving a Scheme  

You can leave a scheme at the end of any VAT period. If your turnover rises above £130 million you will have to leave the scheme immediately. 

You can change to another scheme after one year of joining a scheme. 

Caterers, Pharmacists and Florists  

There are separate rules if you are a: