VAT on buying and selling scrap gold?

[BusinessIdeas]

I will be buying scrap gold from the public and selling into the trade with very tight margins. If the turnover is vatable then it would wipe out the margin completely. I have tried to clarify this with HMRC but they are very vague and I am waiting to hear from a supervisor (they said within 72 hours ) I know there are margin schemes available for second hand goods, but the information on the hmrc site states that precious metals are not eligble for the margin scheme.

There is a special accounting scheme for gold buyers but this is all the info that I seem to be able to glean: http://www.hmrc.gov.uk/manuals/vgoldmanual/vgold1500.htm

In brief it says
Under the scheme:
"the responsibility for accounting for the output tax to HMRC is passed to the purchaser who may also recover the tax as input tax, subject to the normal rules".
To me this appears to mean that I would be responsible for the VAT of my sellers and in turn the people that I sell to would be responsible for my VAT on anything that they buy from me Weird?

Any advice or clarification on this would be truly appreciated - Gina

 

[David Richards]

There is a special accounting scheme for gold buyers but this is all the info that I seem to be able to glean: http://www.hmrc.gov.uk/manuals/vgoldmanual/vgold1500.htm

In brief it says
Under the scheme:
"the responsibility for accounting for the output tax to HMRC is passed to the purchaser who may also recover the tax as input tax, subject to the normal rules".
To me this appears to mean that I would be responsible for the VAT of my sellers and in turn the people that I sell to would be responsible for my VAT on anything that they buy from me Weird?

Any advice or clarification on this would be truly appreciated - Gina

That's from an internal HMRC manual and they're not generally written in a very accessible way.

It's describing a system called reverse charge VAT. It's used by HMRC for some high-value transaction types between VAT-registered businesses, which have high levels of VAT fraud - other examples include mobile phones and computer chips. Basically instead of the seller charging VAT and the buyer claiming it back, the seller doesn't charge VAT but the buyer pays and reclaims the VAT due.

I'd suggest reading VAT Notice 701/21, which has more useful information and is a bit easier to read.

 

[Matthew Barsauckas]

Hi,

Either way you must write out to HMRC and get a written reply or at least keep a copy of your letter requesting clarification.

If you do not have this backup and proceed without confirmation, it could take a bite out of you someway down the road.

So take the 20 minutes and fire of a letter and Record Delivery it and keep the proof of sender details.

Regards,

 

[BusinessIdeas]

Thank you, I have had clarification from HMRC so its all sorted, thank you very much for all your help

 

[teresasway]

You had clarification but you did not tell us the outcome of the situation ? as i have e mailed you i really would be grateful of this information. Seems Vat people have no idea at all regarding scrap gold. One officer is trying to put mine down to me buying 2nd hand goods so they can charge me vat. Scrap is scrap. These people need to know what vat is about instead of letting us be frantic about finding out the law only to tell them then they say errrrrrrrrr but you need to pay vat errrrrrr. I think to myself what dont they understand about public notice 701/21 section 11.
But you have to pay vat madam errrrr. laugh. The bullion dealers i use have told me time and again about the public notice why do everyone else know ecept the vat people. ( But you have to pay vat madam errrrrrrrrr) oh lord like talking to a lamp post. as you can read these vat people have sent me up the pole and im not down yet. Thanks for reading.

 

[FlexF]

You had clarification but you did not tell us the outcome of the situation ? as i have e mailed you i really would be grateful of this information. Seems Vat people have no idea at all regarding scrap gold. One officer is trying to put mine down to me buying 2nd hand goods so they can charge me vat. Scrap is scrap. These people need to know what vat is about instead of letting us be frantic about finding out the law only to tell them then they say errrrrrrrrr but you need to pay vat errrrrrr. I think to myself what dont they understand about public notice 701/21 section 11.
But you have to pay vat madam errrrr. laugh. The bullion dealers i use have told me time and again about the public notice why do everyone else know ecept the vat people. ( But you have to pay vat madam errrrrrrrrr) oh lord like talking to a lamp post. as you can read these vat people have sent me up the pole and im not down yet. Thanks for reading.

Its not subject to VAT. They wouldnt let me register for VAT when I enquired.

 

[teresasway]

Have you got the name of the vat officer who delt with you as I cant get these officers of vat to understand regarding not subject to vat. If you are buying gold be careful when you hit vat fresh hold register and you can claim your vat on items you buy. If you have them contact details i would be grateful. Thank you Teresa.

 

[Rolo Tomasi]

Its not subject to VAT. They wouldnt let me register for VAT when I enquired.

Actually it is subject to VAT but it has its own scheme (a reverse charge).

The special accounting scheme for gold transactions transfers the responsibility of paying vat from the seller to the buyer. There are a number of conditions which need to be met in order to use this scheme (see VAT notice 701/21 section 11).

In practice what will happen is that you will buy the gold from the general public. You then sell the gold to a bullion dealer but on your sales invoice you need to include the words "£......output tax on this supply of gold to be accounted for to Customs and Excise by the buyer.” It is then the buyers responsibility to account for the VAT to HMRC. In order to ease the administration most bullion dealers will use a self billing invoice system which ensure that your sales invoices have all the correct details on them.

 

[teresasway]

Thats great I thought so. I just need to have all my old invoices re printed by the bullion dealers that i use. The vat people put me under investigation and would not issue a vat number for 5 months thats why im in deep water.

 

[BusinessIdeas]

I hope this is all clear for you now Teresa, thank you for the messages, I have registered voluntarily and have just had my VAT No sent by post. My bullion dealer doesnt really give proper invoices as such so I am just going to claim the input from my side and see what happens.