Margin schemes ― overview

Produced by a Tolley Value Added Tax expert

Value Added Tax

Guidance

This guidance note provides an overview of the margin schemes that businesses may wish to use in respect of sales of secondhand items such as:

•
second-hand goods
•
works of art
•
collectors’ items
•
items sold under the global accounting scheme

See also De Voil Indirect Tax Service V3.532

What are margin schemes?

Margin schemes are 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.

VAT is normally due on the full value of goods sold. The margin schemes allow a VAT registered business who meets all the conditions outlined below to calculate VAT on the 'profit margin' ie, the difference between the price at which the goods were obtained and their selling

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