Check if you can use a VAT margin scheme if you import from, or export to, countries outside the UK
If you import or export goods, find out if you can use a margin scheme to account for VAT. (VAT Notice 718)
If you import goods
You can use a margin scheme when you:
- import works of art, collectors’ items or antiques into Great Britain from outside the UK
- import works of art, collectors’ items or antiques into Northern Ireland from outside of the EU and the UK
- sell second hand vehicles in Northern Ireland which were purchased in Great Britain
If you do not use a margin scheme, you must sell the goods under the normal VAT rules.
When you cannot use a margin scheme
You cannot use a margin scheme when you:
- buy goods from Great Britain and sell in Northern Ireland, unless they are works of art, collectors’ items or antiques or are second hand vehicles
- import goods other than works of art, collectors’ items or antiques into the UK
- sell goods which have been imported into EU member states, and which you have got somebody to collect on your behalf
If you import works of art, antiques and collectors’ items
Works of art, antiques, and collectors’ items qualify for a reduced rate of import VAT, if they are imported into:
- Great Britain from outside the UK
- Northern Ireland from outside the EU
Goods held under Temporary Admission
Such goods are often entered for relief under Temporary Admission (previously known as Temporary Importation), usually to be sold at auction.
Once the sale has taken place, the goods are:
- re-exported from the UK or re-exported from Northern Ireland to a place outside the EU
- declared to another Customs procedure, for example Customs Warehousing or Inward Processing Relief
- finally imported
If the goods are imported, or after sale are declared for entry to Customs Warehousing or Inward Processing Relief or finally imported, these qualify for the reduced rate of VAT but where the goods are sold at auction the buyer’s premium does not.
You may use the scheme to account for sales of such items by auction, but you must charge VAT on the buyer’s premium at the standard rate.
If the goods are directly re-exported from Temporary Admission following the auction then you may charge VAT on the buyer’s premium at the zero rate.
Purchase price for overseas sellers
If you import works of art, antiques or collectors’ items for an overseas seller, you can use the reduced rate of 5% for these imports.
You must not reclaim the import VAT as input tax, or include it in your scheme calculations, but you can reclaim the amount from the seller outside the scheme.
You must calculate your purchase price in accordance with the rules.
Purchase price for works of art from the creator or their heirs
You must not reclaim any VAT charged by the supplier for works of art obtained from the creator or their heirs.
For businesses in Northern Ireland, if the work of art is an acquisition you should:
- account for acquisition tax in box 2 of your VAT return
- not recover the corresponding acquisition tax in box 4 (input tax)
You must calculate your purchase price in accordance with the rules.
The creator, or their heir, will have to account for output tax on the full hammer price, so they may ask you to sell the item under a standard margin scheme.
If you account for the sale under a standard margin scheme, you must show VAT separately on any invoice or statement you issue for charges for your services. This is so that the seller will be able to reclaim the input tax on those charges.
Your purchase price under the standard margin scheme option will be the hammer price only.
If you export goods
If you export goods to a destination outside the UK then you may be able to zero rate the sale, provided you can meet the conditions and time limits for zero rating.
If you can meet the conditions then you should insert ‘nil’ in the VAT due column of your stockbook and refer to the reason why you have closed the entry.
If someone is selling the goods on your behalf
You cannot usually zero rate an export if you sell the goods through an auctioneer or dealer who acts as an agent in their own name.
This is because the sale of the goods is treated as 2 separate supplies:
- from you to the agent
- from the agent to the purchaser
Your sale of the goods is a supply to the agent, rather than a supply to the final purchaser. It can only be treated as a zero-rated export if the agent is located outside the EU.
If you’re an auctioneer and sell the exported goods under the auctioneers’ scheme
If you’re acting in your own name, can meet the conditions for zero rating, the whole supply will be zero-rated.
However, you must obtain proof of export when you apply zero rating to the margin.
If you’re an auctioneer and sell the exported goods under a standard margin scheme
You’ll be able to sell the goods at the zero rate outside the scheme if you can meet the conditions, but your services will normally be standard-rated.