VAT Marginal Scheme (Purchase Value)

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Hi everyone,

I know our accountant should be able to answer this but they're not the best, so looking for alternatives. In the meantime, hope someone can help.

If we purchase say 50 x items at £100 on the marginal VAT scheme, but 10 of them were of poor quality so the supplier issued us a credit of £10 for each item, should we then go back to our inventory and adjust the cost price or just leave as a credit and keep all the values the same?

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By paul.benny
22nd Feb 2024 14:33

The VAT margin schemes are essentially for second-hand goods. The scenario you've described makes me question whether you are actually eligible to use a margin scheme. What goods are you buying and reselling? And who are you buying from (private individuals, other businesses)?

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Replying to paul.benny:
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By onthewall
22nd Feb 2024 15:17

That’s why we’re on the Marginal scheme, as they’re second hand goods…

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By tom123
22nd Feb 2024 14:41

You still have the same quanity of items, but they are now worth less in total.
How your software deals with the required stock valuation will depend on the product.

If there is no specific revaluation routine, then you should issue all the current stock, at whatever value it holds, and then receive the stock back into the system at the new value.

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Replying to tom123:
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By onthewall
22nd Feb 2024 15:18

Thanks for this, makes sense.

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By Leywood
22nd Feb 2024 15:02

onthewall wrote:

Hi everyone,

I know our accountant should be able to answer this but they're not the best, s

Get a new one.

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