Selling houseboats and caravans if you use a VAT margin scheme
If you sell second-hand houseboats or caravans in the UK, find out how to use a margin scheme to account for VAT (VAT Notice 718).
There are special rules if you sell houseboats and caravans under a margin scheme.
When you can use a margin scheme
You can use a margin scheme if you sell:
- second-hand boats, houseboats and caravans which do not meet the criteria for zero rating
- standard-rated fixtures or removable contents from a second-hand caravan or houseboat which is zero-rated
VAT is normally due on the full value of the removable contents within a zero-rated caravan or houseboat.
If you buy and sell used caravans or houseboats you do not have to account for VAT on the full value of the removable contents but may use a margin scheme to calculate, and account for VAT on the difference (or margin) between your buying price and selling price.
If the buying price is equal to or exceeds the selling price there is no margin made and no VAT is payable.
How to work out the margin and VAT due
You should:
- work out the purchase price and selling price
- take away the purchase price from the selling price to work out the gross margin
- multiply the gross margin by 1/6
The VAT due is the difference between what you paid for the goods and what you sold them for, not the overall profit you have made on them.
Purchase price
The purchase price is everything you pay for the goods and follows the same rules as the selling price.
Selling price
The selling price is everything you receive for the goods, whether from the buyer or a third party, including:
- incidental expenses directly linked to the sale
- accessories fitted before the sale
If you use an agent
If you use an agent, how they charge their services to you will affect your final selling price.
They will either:
- retain a percentage of the selling price
- make a separate charge to you
You should check with your agent to make sure you are calculating your selling price in the correct way.
Records to keep
You must keep normal VAT records when you use a margin scheme.
You must also keep:
- a stockbook that tracks each item sold under a margin scheme individually
- copies of purchase and sales invoices for all items
If you sell standard rated fixtures or removable content
There are 2 ways you can account for VAT under a margin scheme.
You can either calculate standard appointment of values or actual values.
If you use another method, it must produce a fair and reasonable result.
Further information
You must show any goods you buy or sell using a margin scheme on your VAT return.