20 percent VAT on machines

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jingle
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20 percent VAT on machines

Post by jingle »

I just bid on a mutoscope on eBay
It’s come up that there’s 20% vat on top of bid
😲😲is this new. Never seen that before or is it the seller putting this on
Confused Bob
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coppinpr
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Re: 20 percent vat on machines

Post by coppinpr »

There is no VAT on second-hand goods so, unless your machine is brand-new, either eBay has misread the ad (the seller might have listed it as new by mistake) or the seller is trying it on. Most likely it's been listed as new by the seller by mistake.
The seller might be VAT registered, in which case eBay will add the VAT (on new items only). If the item is bought from England by a buyer in another country eBay might also add tax to the final amount. I do not know if the same goes when an English buyer buys from another country.
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badpenny
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Re: 20 percent vat on machines

Post by badpenny »

There is VAT on second-hand goods if the seller is VAT registered. Generally, businesses are required to register for VAT with HMRC once their taxable turnover reaches a certain threshold, which for the tax year 2021/2022 is £85,000.
https://goselfemployed.co/vat-margin-sc ... usinesses/
jingle
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Re: 20 percent VAT on machines

Post by jingle »

Ok I think he must be vat registered
This maybe why it sold for about 2500 then got re advertised as he must of through vat on the last sale and the buyer scarpered
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coppinpr
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Re: 20 percent VAT on machines

Post by coppinpr »

There is VAT on second-hand goods if the seller is VAT registered. Generally, businesses are required to register for VAT with HMRC once their taxable turnover reaches a certain threshold, which for the tax year 2021/2022 is £85,000.
this is NOT true as written here, there is no VAT on the actual second-hand goods only the profit the seller makes IF he is VAT registered.
if he could show he bought the machine for £2000 (not hard to do,in fact he could quite easily show he bought it for £3000 and made a loss on the sale)and it sold for £2500 AND he was vat registered the VAT on the sale would be only £100( 20% of the £500 profit)

My wife was a jeweller all her life and a major part of their sales were second-hand jewellery and Georgian silver and these VAT rules always applied
it also shows up well at auctions on machines sold at auction houses you only pay VAT on the commission (which is the visible profit the auction house makes)
pennymachines
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Re: 20 percent VAT on machines

Post by pennymachines »

I'm no tax expert but...

the UK government website says VAT registered businesses or individuals selling second hand goods must charge full VAT unless the item is eligible for (and the seller opts to use) a VAT margin scheme.
GOV.UK wrote: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
https://www.gov.uk/vat-margin-schemes

The margin scheme can only be used if you keep the correct records, report it on your VAT return and meet the eligibility requirements.
Taxinsider wrote:...when you buy second-hand goods from a trader using one of the second-hand margin schemes you will be charged VAT on the profit margin, but as a condition of the scheme you will not be issued with a VAT invoice and you will not be able to recover the VAT you are charged.

Tip:
If you are a VAT registered business you can ask to purchase the item outside the margin scheme, in which case you will be issued with a VAT invoice and will be able to recover the VAT but will be charged VAT on the full sale value.
https://www.taxinsider.co.uk/buying-and ... d-traps-ta
coppinpr wrote: Sun May 01, 2022 11:30 am My wife was a jeweller all her life and a major part of their sales were second-hand jewellery and Georgian silver and these VAT rules always applied...
I've never sold jewellery, but the VAT margin scheme explicitly excludes precious metals and stones:
GOV.UK wrote:You cannot use a margin scheme for:
  • any item you bought for which you were charged VAT
  • precious metals
  • investment gold
  • precious stones
coppinpr wrote: Sun May 01, 2022 11:30 am it also shows up well at auctions on machines sold at auction houses...
They don't purchase the items and use the auctioneers' VAT margin scheme.
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badpenny
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Re: 20 percent VAT on machines

Post by badpenny »

The quote "There is VAT on second-hand goods if the seller is VAT registered. etc. etc." was lifted directly from HMRC website.

I quoted it as I have fond memories as a publican of paying VAT on fixtures and fittings when moving pubs and nobody could describe a load of old tables chairs and horse brasses as anything but second-hand. However all publicans are registered for VAT, it is a requirement.

BP
Cross posted with the more sensible views of this complex issue by PM
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coppinpr
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Re: 20 percent VAT on machines

Post by coppinpr »

GOV.UK wrote:
You cannot use a margin scheme for:
any item you bought for which you were charged VAT
precious metals
investment gold
precious stones
but does not exclude jewellery



ok as usual you think your right and I'm wrong, I must tell all the accountants that did all the VAT for all the jewellers my wife worked for for 50 years that they and the VAT inspectors were wrong because you said so.
Ive finally had enough, you win
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badpenny
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Re: 20 percent VAT on machines

Post by badpenny »

Eh? ... Have I walked into the wrong room? Who just won what? !PUZZLED!
pennymachines
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Re: 20 percent VAT on machines

Post by pennymachines »

Whatever I've won, I'd like to return it. The VAT regulations on second-hand goods, antiques and collectors items are a little complex, so it seemed best to quote directly from, and link to GOV.UK.
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