VAT Advice

[Angels Share]

Hi all, I buy and sell whisky at auctions and have just become VAT registered. My query is this.
I spoke to the owner of one of the whisky auction sites I use and he said if any of the bottles I sell via his auction site gets exported outside the EU then I will not have to pay the VAT on that sale.

See below how I have to account for VAT.

As the auctioneer does not have a facility to add VAT to the hammer price as the likes of a traditional auctioneer I have to pay my VAT as shown below

1) I purchase a bottle from a shop for say £3000 and claim back £500 VAT and a net of £2500
2) The bottle sells for £5000 therefore my accounts show NET £4166.67 VAT £833.33
3)Nobody can claim back the VAT of £833.33 as the auctioneer uses the auctioneer scheme,

The auctioneer has said to me if the bottle gets exported to say Taiwan and the auctioneer can provide me evidence of this then I will not have to pay the £833.33 to HMRC and my figures would be a net of £5000 with Nil VAT.

I have simplified the figures so it is easier to understand

BTW I also use the second margin scheme on bottles i buy at auction and sell at auction but the example above is just a normal VAT.

thanks in advance and I hope it is clear

Carl

 

[Angels Share]

Sorry, I should have added is this correct what I have been told from the auctioneer?

Thanks again

 

[Anthony K]

If you are exporting the item and are selling it for £5000 including vat, as long as you can prove that it left the country, you can deduct the vat so the buyer pays you £4166.66. The buyer may have to pay vat at their end, depending on their customs laws.

 

[Scalloway]

VAT on exports to non-EU countries

https://www.gov.uk/guidance/vat-exp...ods-abroad#vat-on-exports-to-non-eu-countries

 

[Angels Share]

If you are exporting the item and are selling it for £5000 including vat, as long as you can prove that it left the country, you can deduct the vat so the buyer pays you £4166.66. The buyer may have to pay vat at their end, depending on their customs laws.

Thanks for reply, I have no mechanism to deduct the VAT as it is sold at auction,I do not know who the buyer is. So the bottle sells on the site for £5,000 and the buyer will pay £5,000+ 10% commission plus vat (only on the commission which is deductible outside EU) so the buyer does not pay me direct,everything is done through the auctioneer.

hope this is clear

 

[Angels Share]

VAT on exports to non-EU countries




This is what I do not understand as VAT is not charged, as the auctioneer uses the auctioneer scheme and VAT is only charge on their commission not the hammer price and as I'm VAT registered I work out the VAT I have to pay to HMRC which nobody can reclaim.

 

[The Byre]

Who do YOU sell the bottle to - the foreign buyer or the auction house?

With whom do you have a contract?

 

[Angels Share]

I sell the bottle via the auctioneer BUT as with every auctioneer they only act if you like as the agent and never own the bottle.BTW I only sell via auctioneers as they are licensed to sell to the public, I have a wholesale license but cannot sell direct to the public.

I was inspected by HMRC in a 9A full inspection I think they call it and the guy from HMRC (who was really good) had never heard of anybody doing what I do with whisky, I imagine what he mean't was most people do not register with HMRC.

 

[The Byre]

It sounds vaguely to me s if the auctioneer is trying to have his cake and eat it. He should pay VAT to you, be VAT registered himself and then deal with the foreign customer in the usual way and complete the usual documents making the sale VAT-free. That at least is how non-UK auction houses in the EU deal with things.

Because you have rightly reclaimed the VAT, the auction house cannot use the so-called 'Auctioneers' Margin Scheme' which is specifically intended for domestically obtained items for which no VAT was ever reclaimed. i.e. when Auntie Floe sells her Loius Wayne pictures of cats playing cards for a few thousand pounds.

You are selling commercial assets and not Auntie Floe's cat pictures! VAT notice 718 specifically excludes commercial assets from the 'Auctioneers Margin Scheme'.

 

[Angels Share]

Thanks for reply, as I say at the moment I take the hammer price then work out net & VAT (when I reclaimed VAT when purchased), no problem if that is the case I was just enquiring and if that is the case I will continue to do so.