As a retailer, how do I record GST in my accounts?
If your retail business is registered for GST, you must record GST in your accounts in the same way that other businesses do. This means that every sale of goods or services should be taxed at the standard rate of 5% or the zero rate of 0%.
For more information, see 'Which goods and services are taxed under GST?'.
GST taxed on goods and services
GST retail scheme
If you sell a lot of items (eg high volume, low value goods) it can be costly to account for GST on every item you sell.
To help with this, the GST retail scheme enables you to account for your total quarterly sales instead of your individual sales, reducing your accounting and book-keeping costs.
Is my business eligible for the GST retail scheme?
If your retail business makes 50% or more of its sales to the general public, you are eligible. You don't need to register or check with the GST team first - simply apply the scheme to your quarterly returns.
If you want to use an alternative or bespoke accounting system for your returns, you will need to write to the Comptroller of Taxes to ask for permission.
How does the scheme work?
When you prepare your quarterly GST return, to calculate the amount of tax due simply apply the GST fraction of five over one hundred and five (5/105) to your total tax-inclusive quarterly sales.
For zero-rated sales, simply enter the total sales made at the zero-rate of tax during that quarter on your return.
Download the GST retail scheme (size 83kb)
Sales to customers
Instead of issuing full GST invoices to your customers, you can provide a simplified invoice.
A simplified invoice only needs to show:
- your GST registration number
- a description of the goods
- the tax-inclusive price.
However, you must issue a full GST invoice to a customer if they ask for one.
Sales to other GST-registered businesses
You must continue to account for supplies you make to other GST-registered businesses on a sale-by-sale basis, but you can operate a dual accounting system - ie applying the retail scheme rules to sales to the general public, and the normal GST rules for sales to other GST-registered businesses.
My input tax is greater than my output tax - how do I claim a refund?
Normally, when you work out your quarterly accounts, you offset the GST you've collected from your customers (your output tax) against the GST you've paid on your business costs (your input tax). You only pay us the difference of these two amounts.
However, if in any quarter your input tax is more than your output tax, you can carry forward the difference as a credit to be applied to your next quarterly return.
If your input tax is more than your output tax in two or more consecutive quarters, you have the following options:
- carry the accumulated amount forward to the following quarter as a credit; or
- apply to use the credit to offset any other tax you might owe the Taxes Office; or
- apply for a repayment of the amount of GST that is owed to you
How GST works for businesses
Can I claim monthly GST refunds?
If the nature of your business means you regularly claim refunds (eg if you are an exporter or a property developer), you can apply for repayments to be made to you on a monthly basis in order to assist your cash flow. You will be required to complete and submit a GST return each month.
What happens if a payment is in a foreign currency or is not money?
If you are paid, or make a payment, in any currency other than £ Sterling, you should convert the value of that transaction into £ Sterling using a standard bank exchange rate on the day of the transaction.
If you have paid or received anything other than money in exchange for goods or services, you must express this in terms of the fair market price in £ Sterling.
Normally when you supply goods or services for free or for less than the fair market price, the transaction has no value. However, if you are supplying to any of the following, the value of the goods and services supplied must be the fair market price, even if they were donated:
- charities
- institutions of religious worship
- educational institutions
- residential homes, or
- orphanages
The fair market price can be the cost price to you, but it must be a price that can be justified.
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