VAT Return and Margin Schemes for Second-Hand Goods
VAT margin scheme ( nicknamed as Second Hand Goods Scheme). VAT registered traders use the VAT margin scheme to sell and purchase second-hand goods. It allows the seller of such goods in certain situations, to defray VAT to HMRC only on the difference between the price he sold them. Well, you have to pay VAT 16.67% on the difference of items that you purchased and sold. It’s a useful scheme for SMEs (Small and Medium-Sized Enterprise). In this blog, you find out how to file VAT return and margin scheme for second-hand goods
You can utilize the VAT margin scheme only to buy and sell these items that are listed below:
- Second-hand goods
- Works of art
- Collector’s items
You can’t use a margin scheme for:
- Any item you buy on which you get charged VAT
- Precious metals
- Investment gold
- Precious stones
Consider the VAT margin scheme
You can use the VAT margin scheme if the VAT registration for business is selling you an item under the margin scheme and also in the situation if you have purchased the item from a non VAT registered business or individual then you can utilize margin scheme.
How to calculate the margin
According to the margin schemes, You should know about how to file VAT return because you only have to account for VAT when you sell an item for more than you defrayed for it.
Price net of VAT
VAT Due @ 16.67% of total profit
You need to obtain a purchase invoice containing the following information.
- Seller’s name and address
- Your name and address, of your business
- The distinctive stock-book number of an item (if you bought the item from another VAT-registered
- Invoice number (unless you bought that invoice yourself)
- Item description
- Total price – you should not add any other costs to this price
- If you purchased an item from another VAT-registered business
When you trade or sell an object, your invoice should contain the following information
- Your name, address and VAT registration number
- The buyer’s name and address, or that of their business
- The item’s unique stock book number
- Invoice number
- Item description
- Total price – you should not demonstrate VAT separately
- Any of the following: ‘margin scheme – second-hand goods’, ‘margin scheme – works of art’ or ‘margin scheme – collectors’ items and antiques.
When you use the VAT margin scheme, you should keep usual VAT records, a stock book that tracks each item sold under the margin scheme individually and also the copies of purchase and sales invoices for all items.
While using a margin scheme, you should show goods you bought or sold on your VAT return.
For further information, Contact BNW Accountants. They are highly recommended and quite professional. They will provide you a quality taxation service and margin scheme VAT.