Retail VAT scheme

violeta

Please can someone help me understand the benefit of this scheme.
I recently started working for a retail business where we buy items with standard and zero rated VAT element and sell them the same way. I am trying to figure out if we can save money on our VAT bill by using one of the retail vat schemes, I thought maybe apportionment scheme from what I read on HMRC website. I was looking on HMRC website but I am struggling to understand the benefit of this scheme and can we use it or not.

Any suggestion or pointing in the right direction is much appreciated.
Many thanks

burg

The VAT Retail scheme for what you want helps where you do not have systems in place to easily record the split between 0% and 20% sales.

Basically recrod your purchases accurately using the VAT rates on the purchase invoices. Work out the split between 0% and 20% purchases. Apply the same % split to the sales.

So if in the particualr period 16% of purchases were 0% then presume the 16% of the total sales were also 0%.

Obviously you may have 5% and exempt sales to consider too.

violeta

Thank you Burg

All our invoices have split of totals in 0 and 20% rated Vat items. I then post it in sage using those amounts to correct T codes. We don't have reduced rate items yet.
When we sell items we sell them the same way. Zero rated items don't have vat applied on sales.

That is why I m confused how does the retail scheme help. What am I missing here? Does it mean in our case it's all recorded correctly and any of these schemes are not necessary.

Hope I'm making sense here.
Thanks

violeta

Burg
Sorry just read your reply again and I think I initially didn't understand it properly. It is sales that are an issue not recording purchases.
Which scheme would you find the best to use any suggestions

Thanks

burg

I'm no expert in VAT by any means. I just have some expereience of the above scheme. The till was not sophisticated enough to record between standard and zero rated sales and nobody buying was that interested in receipts (a corner shop).
The scheme above helped identify the split of sales as standard rated V zero rated.
It sounds as though your POS can easily ID which items are which (i.e. at what VAT rate) when being sold so the scheme will be of no help.

violeta

Thank you for your comment. That is why I didn't get how can scheme help us and if we should use it. It is clearer now. Second opinion is much appreciated.