I'm hoping someone can help me with this! My brother in law & his partner recently set up a monthly poultry auction (he's an auctioneer, makes sense to them)
When he started, he said he'd checked re VAT and would only have to register if his commission turned over more than £73k, and he could use the auctioneers margin scheme anyway, so wouldn't be an issue.
Their first one was March, and they have been going from strength to strength, with the July one turning over £9.5k sales, plus commission. I've now been having a little look at the VAT regs, and have noticed that the auctioneers margin scheme is only available "if you are arranging supplies of second-hand goods, works of art, antiques or collectors items", which they definitely aren't!!
If I'm reading the guidance correctly, his turnover would be all the sales and commission, and should he have to register he would have to apply VAT to the sale price as well as on the commission. The invoices to both the buyer and seller are issued in their business name.
Would be very grateful for any views, knowledge or general pearls of wisdom
You could look at the VAT Margin Scheme - See VAT 718 but there's nothing about livestock in it. It's more to do with second hand goods where your turnover is based on the difference between the buying and selling price rather than the total selling price.
There's also VAT 700/46 about farmers and the flat rate scheme but he's not a farmer.
Does he buy the poultry and then sell it or does he just auction it on behalf of the poultry farmer. I'm no expert but I would have thought that any VAT liability would be on the farmer who is actually selling the poultry. Your brother-in-law presumably just stands with his gavel and takes the bids and for this service he receives a commission, therefore, his income is only the commission he takes from the sale. If the poultry doesn't sell presumably the farmer takes it back so the "goods" do not and never have belonged to your brother in law. I would liken it to an estate agent who sells a house his turnover is not the amount of the sale of the property but the commission he takes from that sale.
I await comments from others.
-- Edited by semsley on Wednesday 13th of July 2011 12:31:16 AM
As far as I can see, he's not eligible for the margin scheme, or the farmers scheme for the reasons given.
I would agree whole-heartedly with your view and your comparison to an estate agent, but I have a sneaking suspicion that HMRC don't! Possible because an estate agent doesn't bill for the amount of the house plus the commission, just for the commission??
A few of the bits I've read on HMRC's website seem to imply that it is the invoicing that is the crucial element, and they issue invoices for the amount of the sale plus commission to the buyer and the sale less commission to the seller.
Any other views would be very gratefully received!
VATMARG04350 - The auctioneers scheme: Sale of new goods on behalf of non-taxable persons
An extra-statutory concession (ESC) introduced with effect from 1 January 1999 allows the auctioneers scheme to be used for the sale of all goods grown, made or produced (including bloodstock or livestock reared from birth) by non-taxable person.
I guess this applies to only a small percentage of sellers but if they are VAT registered I guess it only affect their cash flow.
