Can I supply local shops on sale or return?

Agree what the shop is taking on

Start with a limited product range and a clear review date. Ask the shop to buy goods for resale with an agreed unsold-return option. If it proposes selling on your behalf for commission instead, have that arrangement reviewed separately before using these terms.

Sign a retailer agreement naming the businesses, premises, products, quantities, trade prices and VAT treatment. Include the trial dates, reporting contacts and return process. Our consignment stock guide covers the wider stock-holding arrangement; this guide focuses on your handover to local shops.

Connect ownership to a signed stock record

HMRC describes sale or return as goods remaining yours until the customer adopts them, meaning it indicates a wish to keep them. Its special rules require an unequivocal return right. Have the ownership, adoption and return clauses reviewed together rather than relying on the words 'sale or return'.

Attach a signed delivery count showing product, batch, selling unit, quantity and condition. Agree how each shop records sales, customer returns, transfers, samples and adjustments. Reconcile the movement record to a physical count, with disputed differences shown separately. Preserve the identifiers described in our batch traceability guide.

Allocate damage and missing-stock costs

Write down who bears theft, breakage, water damage, deterioration and unexplained shortages during delivery, display, storage and return transport. Agree the valuation used for compensation and who approves any deduction. Keep factory defects separate from damage after the shop receives the goods.

Ask the shop and your insurer to confirm cover for your stock at the named premises. Agree incident reporting, photographs and access for inspection. Identify display samples separately, including whether opened or handled goods can return to saleable stock.

Make the unsold-return route workable

Specify the return deadline, destination, acceptable condition and packaging. Say whether the deadline concerns notification, dispatch or receipt. Name who books collection, pays carriage and bears transit loss. Explain how rejected returns and goods left awaiting collection will be handled.

At closure, agree a final count and receipt for returned goods. Separate sound, damaged and disputed stock before settling the account. Review sales alongside display time, availability and customer comments before reordering. Use our unsold stock valuation guide when preparing the accounting records.

Set reporting and payment dates separately

Enter actual calendar dates or an unambiguous recurring schedule for sales reports, invoice checks and payment. State the event from which any payment period runs. Agree the amount payable to you for each product, how VAT is shown and how authorised refunds or deductions affect settlement.

Ask each shop for a statement identifying products, quantities and relevant transaction dates. Match it to stock movements and invoices, then record payment against the agreed due date. Agree how disputes are raised and whether undisputed amounts are paid while an exception is investigated.

Check VAT before the shop starts selling

For a VAT-registered supplier using qualifying sale-or-return terms, HMRC places the basic tax point at adoption or 12 months after removal, whichever is earlier. Ask your accountant how the agreed return deadline affects adoption and assess shelf offers, customer allocation and resale before choosing the trigger. Do not assume the shopper's payment date controls it.

Issuing a VAT invoice can override the basic tax point. A VAT invoice issued within 14 days after it can create a later tax point under the applicable rule. Have your accountant approve the invoicing timetable, including any early invoice, rather than treating the shop's payment deadline as the VAT date.

Keep delivery, adoption, return and invoice dates alongside the stock ledger. Give your accountant any deposit terms too: HMRC says a delivery deposit repayable when goods are returned does not constitute adoption. Check the actual agreement before assuming every advance payment has the same treatment.