About this calculator

This calculator is designed for mixed retail businesses, such as convenience stores and small shops selling goods subject to different VAT rates.

Its purpose is to help estimate which of the relevant UK VAT schemes may result in the lowest VAT liability arising from the business's normal retail trading activity.

The calculator compares the estimated VAT liabilities under:

• Flat Rate Scheme
• Point of Sale Scheme
• Apportionment Scheme 1
• Apportionment Scheme 2

Important – this calculator does NOT replace a VAT return

This calculator is a comparison and estimation tool only.

It should NOT be used to prepare or replace a VAT return.

It compares the estimated VAT liabilities arising from normal retail trading activity over the same period under the different VAT schemes.

A complete VAT return may include items and adjustments that are outside the scope of this calculator. In particular, the calculator does not take into account:

• opening stock adjustments;
• capital expenditure and capital goods;
• transactions and expenses outside the retail trading activity being compared, such as professional fees, rent and utilities where applicable, motor expenses and other overheads;
• adjustments required under the VAT retail scheme rules that are not already reflected in the Sales/DGT figure entered;
• the annual adjustment required when operating Apportionment Scheme 1; or
• the opening stock and rolling calculation required when operating Apportionment Scheme 2.

The calculator therefore compares the VAT liabilities arising from the retail trading activity itself, rather than attempting to calculate the final amount payable on a VAT return.

Accuracy of the estimate

The results produced by the calculator are estimates and depend on the accuracy of the information entered.

The VAT-inclusive retail sales / Daily Gross Takings (DGT) entered should already include any adjustments required under the applicable retail scheme rules.

In general, figures covering a longer trading period should provide a more reliable estimate.

What determines your VAT liabilities?

The calculation is primarily determined by:

• the amount of VAT-inclusive retail sales / DGT;
• the sales breakdown between the relevant Flat Rate Scheme categories;
• the sales breakdown between the 0%, 5% and 20% VAT rates; and
• the average gross margin percentage for each VAT-rate category.

Gross margin % = (selling price − purchase price) ÷ selling price × 100

The figures entered should represent the normal trading activity of the business as accurately as possible.

Use of any VAT scheme remains subject to the relevant HMRC eligibility conditions and VAT Notices.

1. Retail sales / DGT

The Sales/DGT amount entered should already include any adjustments required under the applicable retail scheme rules.

2. Sales breakdown by Flat Rate Scheme category

3. Sales breakdown by VAT rate

4. Gross margin by VAT category

Gross margin % = (selling price − purchase price) ÷ selling price × 100. VAT-inclusive values.

Calculated sales and cost of goods sold by VAT category

Cost of goods sold (COGS) is used here for the cost of the goods resold during the period (Hungarian: ELÁBÉ). The amounts below are VAT-inclusive because the calculator derives them from VAT-inclusive sales and VAT-inclusive gross margins.

VAT-inclusive sales by Flat Rate Scheme category

Important information and scope

This calculator is a decision-support and estimation tool. It does not determine whether a business is eligible to use a particular VAT scheme.

Scope of the calculator

• It is intended for mixed retail businesses that buy goods for resale and sell those goods without transformation.
• It assumes that goods remain within the same VAT-rate category between purchase and resale.
• It is not intended for manufacturing, catering, services, or goods made or grown by the retailer.
• The Flat Rate Scheme and the VAT retail schemes are alternative methods and are not used together.

Flat Rate Scheme

• The calculator applies one Flat Rate Scheme percentage to total VAT-inclusive turnover, based on the main business activity measured by turnover.
• Where two or more entered Flat Rate Scheme categories have exactly the same highest turnover percentage, this calculator uses the following tie priority for calculation purposes: Food retail, then Other retail, then Cosmetics / toiletries.
• The calculator does not apply the first-year 1 percentage point Flat Rate Scheme discount.
• The calculator does not cover a Limited Cost Business or the 16.5% Flat Rate Scheme percentage.
• Special rules relating to qualifying capital expenditure goods are outside the scope of the calculator.

Point of Sale and Apportionment Schemes

• Input VAT is estimated from the VAT-inclusive purchase values derived from the sales and gross margin information entered.
• Apportionment Scheme 1 uses the VAT-inclusive cost of eligible goods purchased for resale to estimate the allocation of gross retail takings between VAT rates.
• The annual adjustment required when operating Apportionment Scheme 1 is not included.
• Apportionment Scheme 2 uses Expected Selling Price (ESP) proportions. The calculator does not reproduce the opening-stock and rolling ESP calculations required when operating the scheme for VAT return purposes.
• Apportionment Scheme 1 and Apportionment Scheme 2 are shown as not applicable unless the entered sales include goods taxable at at least two distinct VAT rates.

Daily Gross Takings (DGT)

The VAT-inclusive retail sales / DGT figure entered must already include any adjustments required under the applicable retail scheme rules. The calculator does not separately calculate refunds, returns, discounts, vouchers or other DGT adjustments.

Eligibility and HMRC rules

VAT scheme eligibility, turnover limits and other conditions are not tested by this calculator. Before adopting or changing a VAT scheme, the business should check the current HMRC rules and the relevant VAT Notices.

The results are estimates for comparison purposes only and should not be used to prepare or replace a VAT return.