E-BOOK
The VAT Margin Scheme Explained
Buy a jacket for £12, sell it for £49.95, and the standard rules charge VAT on the whole £49.95. The margin scheme charges it on the £37.95 of margin instead. Ten chapters on why the saving is exactly £2.00 and never anything else.
- Why the saving depends on what you paid and never on what you sell for
- The twelve columns VAT Notice 718 requires, and the one people leave out
- When the standard rules beat the scheme, and when to walk away from it
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Who this book is for?
VAT-registered sellers of second-hand goods, and sellers approaching the £90,000 threshold who need to know what changes when they cross it. If you buy your stock from people who cannot charge you VAT, this scheme was written for you.
The arithmetic, settled
The saving is the VAT fraction of the purchase price. At 20 per cent that is one sixth of what you paid, whatever the item eventually sells for. The book proves it once and then uses it throughout.
The record is the condition
Keeping the stock book is not administration that follows from using the scheme. It is a condition of using it at all. Chapter four sets out all twelve columns and what happens when they are not there.
Global accounting, for high-volume sellers
If you buy job lots and sell them piecemeal, itemising is not realistic. Chapter six covers the variant that works on period totals, its £500 per-item limit, and the five categories it will never cover.
FACTS
One sixth
The saving on every item, expressed as a share of what you paid for it. A dealer buying at £200 saves £33.33 whether they sell at £300 or £1,200.
300 units a month
the break-even
11 chapters
One sitting
FACTS
Full selling price
What HMRC charges VAT on when the records will not support your declared margins, even where the goods were otherwise eligible for the scheme.