My client is purchasing the jewellery from non registered sellers (general public) then repair it/ clean it and sell it on.
Part of the second hand jewellery are sold to one company (which is VAT registered) and the VAT amount related to this sales is the client's responsibility. (Special Accounting Scheme)
Also, some of the jewellery are sold to the general public.
which VAT scheme should be used for second hand jewellery in this case?
On HMRC VAT notice 718 re margin scheme it says ' you must not use a Margin scheme to account for the sale of:
- precious metal
- investment gold
- precious stone.'
Could be used the Special Accounting Scheme for the part of gold sold to the registered business and marginal scheme for all other sales, or there is another rule for sale of second hand gold and silver ?
Hi Simona
So hows about an intro before we start. We always ask newbies!
Usual stuff - what prof body do you belong to, do you work for yourself or in a practice/ firm, are you a bookkeeper or accountant, what qualifications, how long in role, where up to in your studies-what exams passed/with what body/in midst of doing, where based, what you did before this role? That sort of thing. Helps get to know you but also how best to pitch answers. Who are you with for MLR?
What VAt scheme have they been using before you took them on?
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
Part of the second hand jewellery are sold to one company (which is VAT registered) and the VAT amount related to this sales is the client's responsibility. (Special Accounting Scheme)
Are you sure?
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
my client received a Self Billing in from his customer and on the bottom of the invoice it says :
'The amount of VAT applied to gold on this inv is £££ and is now the responsibility of xxx VAT no 111111'
my client received a Self Billing in from his customer and on the bottom of the invoice it says : 'The amount of VAT applied to gold on this inv is £££ and is now the responsibility of xxx VAT no 111111'
responsib of xxx? Who? Who is the supplier and who is the purchaser in this and what do the VAt regulations state in this case?
Please answer the first Q I asked also
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
I have finished and passed all AAT levels, I have been working in a practice for the last 5 years as a bookkeeper, still working in the practice and at the moment I am in charged of the VAT returns.
He's customer (I just put xxx instead of the name) is a VAT registered business and when is buying the scrap gold and silver from my client he is also providing a self billing invoice which it says that is hes responsibility as a buyer to declare and pay the VAT over to HMRC,
OK, so this is a complex area of VAT and one which needs some further reading on your part.
You havent answered my query on the invoice, normally the xxx is the purchaser (end) so you need to check the legislation about that because frankly my view is based on the info, the position you have taken is wrong.
You need to consider the definitions of the 3 items you listed in your first post and then read the whole of that VAT guide so its all in context, plus there is another VAT guide that covers the position with regards to the margin scheme (not got the number off the top of my head, sorry - tax season and busy!) Also - we say on here ALL the time, that you need to rely on the VAT act itself rather than the guides, which are ofetn out of kilter with the law.
Honestly, given you are effectively a trainee in practice, also the best place to get such complex VAT advice is from your senior, rather than relying on some random internet bod. They can then also guide you as the best way to process this given the issue of MTD and especially the record keeping from the clients perspective. As Accountants they should be providing that guidance to your client.
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
He's customer (I just put xxx instead of the name) is a VAT registered business and when is buying the scrap gold and silver from my client he is also providing a self billing invoice which it says that is hes responsibility as a buyer to declare and pay the VAT over to HMRC,
hope I have explained it better,
thank you
OK, posted as I was typing the last one. I understand the process. I think though you seem to be getting muddled
So YOUR client buys from members of the public - scrap gold. Ignoring this side of the transaction.
YOUR client (now the supplier) sells to a scrap merchant (the buyer). The buyer issues a self billed invoice to the supplier.
So the xxx and the VAT number belong to whom? The buyer? So why is it the clients responsibility?
edited to correct a typo
-- Edited by Cheshire on Wednesday 15th of January 2020 12:06:05 PM
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
11. The Special Accounting Scheme for gold transactions
Note: the Special Accounting Scheme for gold is compulsory.
11.1 About the Special Accounting Scheme
The Special Accounting Scheme for gold is to be used for the transactions in gold listed at paragraph 11.2 between VAT-registered traders.
Under normal VAT procedures, if youre a VAT-registered trader selling goods you issue a VAT invoice and receive payment for the price of the goods and the VAT due on the sale. You (as the seller) then account to us for this VAT on your next VAT Return.
The scheme transfers the responsibility for paying the VAT on certain transactions in gold from the seller to the buyer.
11.2 When to use the Special Accounting Scheme
The Special Accounting Scheme for gold must be used when:
the seller and the buyer are both VAT-registered persons, or are persons liable to be registered as a consequence of the transaction, or other transactions
the supply by the seller is by way of business and the buyer is making the purchase in connection with any business carried on by them
you carry out treatment or processing work on your customers goods, and the goods produced are fine gold see section 16, gold grain of any purity, or gold coins
The Special Accounting Scheme for gold will apply if you supply:
goods containing gold for which the amount paid or payable for the supply (apart from any VAT) does not exceed, or exceeds by no more than a negligible amount, the open market value of the gold contained in the goods the open market value of the gold is the fix price of the gold at the time of supply, this is the price set in the twice-daily meetings by London Gold Fixing Ltd and includes supplies of scrap (including live scrap scrapped jewellery, broken jewellery, watch cases, cigarette cases and so on) and sweepings supplies of part manufactured or finished jewellery, gold compounds and semi manufactured carated products, are excluded (except gold grain)
services of treating or processing goods to make fine gold section 16 gold grain or gold coins
investment gold regardless of whether the supply is classed as a supply of goods or a supply of services where the seller has exercised the option to tax outlined at section 4, or where the supply is between a member and a non-member of the London Bullion Market Association
This is way I was thinking that part of the sales falls under this Special Accounting scheme.
Am not very sure if for the other sales my client does tot he general public should be used the Marginal second scheme ?
I wasnt querying the fact that sales of scrap fall under the special accounting scheme, but your interpretation of how the VAT works within the scheme.
It is very clear you need some real guidance on this whole scheme - why have you not already asked your senior?
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
First of all though you need to read the 2 relevant vat notices in full AND the VAT act, prepare a note with your arguments one way or another and then back up those arguments and that way you are more likely to have a sensible conversation with that person. Doesnt matter if you are wrong because your senior will be more likely to explain as he / she can see you have put some effort in.
Failing that you need to raise it as a development issue that needs deadling with and in the meantime get your practice manager to re-allocate the work.
Failing that development issue being dealt with you need to raise it as a grievance.
As I said, this is a very technical area and mistakes can be very costly.
We cannot help here if we are only in receipt of a small part of the information rather than the whole.
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
