The following Value Added Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:
This guidance note provides an overview of the margin schemes that businesses may wish to use in respect of sales of the following second-hand items:
works of art
items sold under the global accounting scheme
VATA 1994, s 50A; VAT (Special Provisions) Order, SI 1995/1268; De Voil V3.532; Notice 718 The VAT Margin Scheme and global accounting; 2006/112/EEC, Arts 312–341; VATMARG02000
This note should be read in conjunction with the following guidance notes:
Operating the margin scheme
Global Accounting margin scheme
Margin scheme ― auctioneers
Margin scheme ― second hand motor cars
Margin scheme ― horses and ponies
Margin scheme ― agents and pawnbrokers
It should be noted that using the scheme is not compulsory and goods eligible for the scheme can still be sold outside the scheme in the normal way even if they were purchased from a seller using the scheme. Also, if an eligible item is sold but all the conditions of the scheme are not met, the margin scheme cannot be used and the sale must be dealt with outside the scheme in the normal way.
Margin schemes are an optional VAT accounting methods that can be adopted by relevant businesses. The output tax due is calculated on the margin made on the goods rather than the full selling price.
There are three margin schemes currently in operation which are:
margin scheme for second-hand goods, second-hand cars, works of art, antiques and collectors’ items
global accounting. This scheme deals with low value, bulk volume goods some dealers handle and the impracticality of keeping detailed records of purchases and sales. Under the scheme, VAT is accounted for on the difference between the total purchases and sales of eligible goods in each VAT period rather than on an item by item basis. See the Global Accounting margin scheme guidance note for more information
VAT auctioneers' scheme
VAT is normally due on the full value of goods sold.
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