Sector summary ― retail

Produced by a Tolley Value Added Tax expert

Value Added Tax

Guidance

Introduction to the sector

The retail industry includes any businesses involved with selling products directly to consumers for use or consumption, rather than for resale. Traditionally, the retail sector encompassed shops, department stores and supermarkets. However, online retail is a prolific and growing segment of the market. This guidance note covers the key areas of consideration within VAT and indirect taxes for the retail sector. This guidance note acts as a useful starting point for advisers preparing for a meeting with a retail client, as well as in-house VAT teams.

Key considerations

Topic	Overview	Common issues	Links to further guidance
VAT liability of products	Ensuring that the correct VAT rate is applied to each product can be a significant challenge for retailers. Regular VAT liability reviews should be performed and product files updated to reflect any changes in the applicable VAT rate. This will be a particular focus for retailers selling: – food – pharmaceutical products (including contraceptives and smoking cessation products) – children’s clothes or safety equipment – books / magazines – women’s sanitary

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