- VAT margin scheme allows businesses to reduce tax liabilities by calculating VAT only on the profit margin
- Scheme is beneficial for businesses dealing in high-value second-hand items like cars, antiques, art, or collectibles
- Strict rules and documentation requirements must be followed to avoid penalties
- VAT is paid only on the profit margin, not on the full selling price of goods
- Eligible goods include second-hand goods, works of art, antiques, and collectibles
- VAT is calculated at 1/6th of the profit margin under the margin scheme
- Input VAT cannot be reclaimed on the purchase of goods under the margin scheme
- Accurate record-keeping is essential for using the VAT margin scheme effectively and staying compliant with HMRC’s rules.
Source: merrantiaccounting.com
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
