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 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

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