VAT of second-hand goods
The VAT Margin scheme is where VAT is not charged in a conventional way.
Under the margin schemes, VAT is calculated on the profit margin i.e., on the difference between the cost of acquiring an item and its sale price rather than on the full selling price.
https://www.gov.uk/guidance/the-margin-and-global-accounting-scheme-vat-notice-718
Without the margin scheme the business would have to account for VAT on the full selling price of each item. If an item is sold for less than was paid for it, then no VAT is due on the sale.
The eligible goods are:
- Second-hand goods – defined as tangible movable property that is suitable for further use as it is or after repair, other than works of art, collectors’ items, or antiques and other than precious metals or precious stones as defined.
- Works of art and collectors’ items. The legal definition of works of art includes pictures, paintings, collages, and drawings executed by hand by the artist
- Antiques. The legal definition of an antique is an item, other than a work of art or a collectors’ item, which is over one hundred years old.
If you are looking to know more about how the scheme works, please get in touch with us.
