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November 8, 2023
New guidance will help businesses navigate the VAT second-hand margin scheme, HM Revenue & Customs (HMRC) has said.
The tax authority replaced VAT notices 718, 718/1, and 718/2 with 12 new guides earlier this month.
VAT margin schemes tax the difference between what you paid for an item and what you sold it for, rather than the full selling price.
Each scheme also uses a reduced rate of VAT (16.67 per cent), instead of the standard rate of 20 per cent.
You can use the VAT margin scheme for second-hand goods, works of art, antiques, and collectors’ items.
But it is important to read the full rules and regulations of each scheme to ensure it can be used, or you may be forced to pay the standard rate of VAT on the full selling price of each item.
Links to the new guidance – some of which detail changes resulting from the Northern Ireland Protocol – can be found below:
For advice and support please contact Stephen Slater or Paul Gainford at RMT Accountants & Business Advisors on 0191 256 9500 or via the contact us form.