An Introduction to VAT Margin Schemes
- Price: £3.60
- Published: March 2016
- Type: Business Information Factsheet
- Format: PDF
There are a number of VAT accounting schemes that can be used as an alternative to the standard methods of accounting for VAT by a VAT-registered business. These VAT accounting schemes can help certain types of business save time and money.
The VAT margin schemes are specifically for businesses that deal in second-hand goods, works of art, antiques and collectibles. As there may have been no VAT to reclaim when these items were purchased, the VAT margin schemes allow the business to account only for the VAT on the difference - or margin - between the price paid for an item and the price received for it, rather than on the full selling price. If there is no profit made on the sale of an item, no VAT is payable. A business can still use standard VAT accounting for other transactions that don't involve second-hand goods and other eligible items.
This factsheet explains what the VAT margin schemes are, how they can be used, and how they apply to specific business sectors.