Value Added Tax

Margin scheme — agents and pawnbrokers

Produced by Tolley
  • 19 Oct 2021 22:53

The following Value Added Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Margin scheme - agents and pawnbrokers
  • Agents
  • Disclosed agent
  • Undisclosed agent
  • Records
  • Pawnbrokers
  • Calculating the purchase price
  • Other charges
  • Exclusions

Margin scheme - agents and pawnbrokers

This guidance note provides an overview of the margin scheme rules that apply to agents and pawnbrokers. If the business selling the second hand goods via an auction then please see the Margin scheme - auctioneers guidance note.

This note should be read in conjunction with the Overview of margin schemes and Operating the margin scheme guidance notes.

Agents

Agents act on behalf of other dealers or private individuals in arranging the sale. They usually obtain payment by either retaining a percentage of the selling price or making a separate charge to the seller.

The VAT treatment will depend upon whether the agent is acting as a disclosed or undisclosed agent.

Please see the Supply and consideration ― agents and principals guidance note for more information on the VAT treatment of supplies made by agents.

Disclosed agent

A business acts as a disclosed agent when the customer is aware of the identity of the party actually selling the goods.

A business can elect to account for any VAT using the margin scheme in the normal way if it meets the relevant conditions and it:

  1. sells eligible goods

  2. is VAT registered

  3. an agent sells the goods on behalf of the business in his own name

The purchase price will be calculated in the normal way. The selling price will depend upon how the agent has accounted for VAT on the sale and the value should be the same as the agent's purchase price (see below).

Undisclosed agent

These agents act in their own name, so the customer will think that the agent is acting as the principal when arranging the transaction. Undisclosed agents are treated as the principal for VAT purposes and will therefore be treated as selling the goods. The undisclosed agent can elect to use the margin scheme to account for any VAT due on the sale of the goods if they meet all of the relevant conditions.

The margin will be equal to the charges levied by the

Access this article and thousands of others like it
free for 7 days with a trial of TolleyGuidance.

Think Tax.
Think Tolley.

Critical, comprehensive and up-to-date tax information

LEARN MORE LEARN MORE

Popular Articles

Isle of Man

IP COMPLETION DAY: 11pm (GMT) on 31 December 2020 marked the end of the Brexit transition / implementation period entered into following the UK’s withdrawal from the EU. At this point in time, key transitional arrangements came to an end and significant changes began to take effect across the UK’s

30 Nov 2021 09:21 | Produced by Tolley Read more Read more

Close companies

Generally speaking, inheritance tax (IHT) is charged only on transfers of value by individuals and trusts. However, to prevent avoidance of the tax, the charge is extended to participators in close companies where:•a close company makes a transfer of value, or•the share capital or loan capital of a

19 Oct 2021 23:11 | Produced by Tolley Read more Read more

Audit of tax

Tax professionals will often be asked to provide input into the financial statement work undertaken by audit professionals. This guidance note is intended to give an overview of some of the key issues when undertaking audit work.This note is an introduction only and is written on the assumption that

14 Oct 2021 18:44 | Produced by Tolley in association with Nick Watson Read more Read more