Margin schemes for goods

V3.531 Introduction

Output tax is normally calculated based on the value of the supply, subject to specific exclusions such as zero-rated and exempt supplies. Legislation (described below) provides for VAT chargeable on supplies of goods in certain categories to be based on the profit margin achieved by the taxable person. This arrangement is beneficial (and generally only applicable) where the taxable person buys second-hand goods from private persons, and sells them to private persons, since it avoids the double taxation1 which would otherwise arise. For valuation generally see V3.151–V3.167 and for valuation in the context of part-exchange in particular see V3.152.

The “Seventh Directive” margin

To continue reading
View the latest version of this document, as well as thousands of others like it, sign in to TolleyLibrary or register for a free trial