VAT Margin Scheme on sale of assets

Does the VAT margin scheme apply to sale of assets, or only goods?

Didn't find your answer?

The guidance I have read gives the impression that the VAT margin scheme is only to be used by businesses that trade in second hand goods.

However, it doesn't state explicitly that it cannot be used for the sale of used assets.

I was hoping someone could confirm whether it can or not.

Many thanks!

Replies (12)

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chips_at_mattersey
By Les Howard
20th Feb 2024 11:21

HMRC have removed form their guidance the concession that allowed a one-off transaction to be treated within the margin scheme. Of course, you can ensure the record-keeping requirements are fulfilled for a single item, and so bring yourself within the scheme.
Assuming input tax was not claimed on the asset purchase, you can therefore bring it within the margin scheme.

Thanks (2)
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By David Ex
20th Feb 2024 11:25

Not sure what you mean by “used”. Used by who/who ?

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Replying to David Ex:
Kentnix photo
By Kentnix
20th Feb 2024 11:43

Hi David Ex,

Assets that have been used by the business that is selling them. Items of plant that they no longer have any use for and are selling off.

Thank you

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By rmillaree
20th Feb 2024 11:33

"The guidance I have read gives the impression that the VAT margin scheme is only to be used by businesses that trade in second hand goods."

where did you get this impression from ?

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Replying to rmillaree:
Kentnix photo
By Kentnix
20th Feb 2024 11:42

Hi rmillaree,

The gov.uk guidance refers to 'goods', which I thought was items bought with a view to sale at a profit.

https://www.gov.uk/vat-margin-schemes

Overview
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. You pay VAT at 16.67% (one-sixth) on the difference.

You can choose to use a margin scheme when you sell:

second-hand goods
works of art
antiques
collectors’ items

Thank you

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Replying to Kentnix:
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By David Ex
20th Feb 2024 11:53

Kentnix wrote:

The gov.uk guidance refers to 'goods', which I thought was items bought with a view to sale at a profit.

https://www.gov.uk/vat-margin-schemes

Overview
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. You pay VAT at 16.67% (one-sixth) on the difference.

That link says “You cannot use a margin scheme for: any item you bought for which you were charged VAT”. Does that answer the question?

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Replying to Kentnix:
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By rmillaree
20th Feb 2024 12:05

The gov.uk guidance refers to 'goods', which I thought was items bought with a view to sale at a profit.

not sure why you would make that leap if it doesnt say it ?-

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By DKB-Sheffield
20th Feb 2024 11:52

Les makes a very pertinent point. Did the company claim input VAT on the initial purchase (including an in-time claim on registration)?

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Replying to DKB-Sheffield:
All Paul Accountants in Leeds
By paulinleeds
21st Feb 2024 20:42

To make a point, if you sell your used second-hand fixed asset van, and you did not reclaim input VAT on it, then you can use the margin scheme.

In most cases there is no profit on the van, therefore there is no margin to pay VAT on. Same applies to any piece of plant and equipment.

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Kentnix photo
By Kentnix
20th Feb 2024 12:24

Thanks all,

That's helped boil it down to - can use scheme for one-off sales, as long as conditions are met (e.g. purchase didn't have VAT charged - whether claimed or not) and as long as correct record keeping is followed.

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Replying to Kentnix:
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By FactChecker
20th Feb 2024 14:58

Possibly more parboiled than fully boiled ... in that your two 'as long as' conditions are correct, but the first is potentially incomplete.
It's not just VAT on the purchase itself not being 'allowed', but "You cannot include any of the following in your calculations when using a margin scheme:
- business overheads, - repairs, - parts or accessories".

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Replying to Kentnix:
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By Paul Crowley
20th Feb 2024 16:52

The VAT should have been capable of being reclaimed, even if it was not

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