Product mix reconstruction

When carrying out a business economics exercise, the tax inspector will often use an industry average mark-up of purchases to selling price to construct a sales figure. But this simple calculation doesn’t take into account your business’s product mix. Use this template to demonstrate that the inspector’s calculations are based on flawed assumptions.

Establish your product mix

As most businesses sell more than one item, the first step in challenging an inspector’s business economics exercise is to establish the product mix for your business, i.e. the range of products sold and in what proportion. Do this for a sample period, e.g. three months, and you can generally get this information from a review of sales/purchase invoices. We’ve set out a Product Mix Reconstruction document to help you with this and to provide you with evidence to submit to the tax inspector that their assumptions need upgrading.