HM Revenue & Customs have recently updated their VAT Notice on Retail Schemes, VAT Notice 727/5.

This notice is relevant to businesses that:

  • are VAT registered making retail sales;
  • are unable to account for VAT on those sales in the normal way; and
  • that have an annual retail turnover, excluding VAT not exceeding £130 million.

The changes are to reflect the current ‘capping’ regulations and to change the address within the Notice. The updates can be found in Section 2.6 and 8.2 of the Notice, reproduced below for your reference:

2.6 Can I change schemes retrospectively?

No. Retrospective changes to retail schemes are not normally allowed. The VAT and Duty Tribunals have repeatedly confirmed the principle that where you operate a scheme according to the published rules (or an agreed variation), the tax due under that scheme is the correct VAT for the period. You cannot change schemes retrospectively simply because another scheme produces a lower or different valuation.

We may allow retrospective change in exceptional cases. If you think you have exceptional grounds for a retrospective change you should write to your local VAT Business Advice Centre giving as much detail as possible.

The maximum period for recalculation following a retrospective change of scheme is four years and you must have been, and remain, eligible to use the new scheme during the full period for which you apply.”


8.2 Is there anything else I can do if I am still not satisfied?

You can also appeal to an independent VAT and Duties Tribunal if you are still not satisfied.

You will find out more about the appeal procedure in:

- the leaflet Appeals and Applications to the Tribunals issued by the President of the VAT and Duties Tribunal. Copies of the leaflet and the forms for making an appeal can be obtained by contacting our VAT Helpline, and

- Notice 700 The VAT Guide.”