Margin scheme ― auctioneers

Produced by Tolley
Margin scheme ― auctioneers

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

  • Margin scheme ― auctioneers
  • Accounting for VAT
  • Conditions
  • Eligible goods
  • Tax points
  • Auctioneers’ scheme calculations
  • Completing the VAT return
  • International transactions
  • Intra-EU transactions
  • Exports
  • More...

This guidance note provides an overview of the margin scheme that can be used by auctioneers. The auctioneers' scheme is a variation of the margin scheme. It allows auctioneers to account for VAT on a margin, the calculation of which involves:

  1. adding to the hammer price the cost of the auctioneer's services charged to the buyer

  2. deducting from the hammer price the cost of the auctioneer's services charged to the seller

VATA 1994, s 50A; VAT (Special Provisions) Order 1995, SI 1995/1268 (as amended); Value Added Tax (Cars) Order 1992, SI 1992/3122; VATA 1994, s 47(2A); De Voil Indirect Tax Service V3.533; VATMARG04000; VAT Notice 718/2

This note should be read in conjunction with the following guidance notes:

  1. Overview of margin schemes

  2. Operating the margin scheme

  3. Global Accounting margin scheme

  4. Margin scheme ― agents and pawnbrokers

Accounting for VAT

If an auctioneer:

  1. invoices in its own name

  2. sells goods that are eligible to be sold under the margin scheme (please note that businesses can only use the scheme to account for sales of air guns if they are registered under the Firearms Act 1968)

The auctioneer has a number of methods that it can use in order to account for VAT due on the sale of these items. These are:

  1. using the auctioneers’ scheme

  2. using the normal margin scheme ― see the Overview of margin schemes guidance note

  3. acting as an undisclosed agent ― see the Margin scheme ― agents and pawnbrokers guidance note

VATMARG04050

Conditions

The auctioneers’ margin scheme that has been adapted to deal with the types of sales made by auctioneers. Under the scheme, the VAT due is calculated on a margin which is equal to the value of the services supplied to the buyer and seller using the auction. Therefore, VAT does not need to be accounted on the hammer price of the goods sold.

The following conditions need to be satisfied in order to use the scheme:

  1. the goods must be eligible to be sold under the margin

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