Complete a VAT return under a Margin Scheme

There are special rules that apply to complete a VAT return under a VAT Margin Scheme. The VAT margin scheme is suitable for businesses that buy and sell second-hand goods. For example, work of arts, antiques and collectors’ items.

Under the VAT Margin Scheme, you calculate VAT payable on the profit you made from the sale of a second-hand good. If you made a loss then no VAT is payable. For this reason, you would require to keep and maintain a detailed transactions record under this scheme.

How to complete the VAT Return under the Margin Scheme

Box 1VAT due in this period on Sales£2777.77
Box 2VAT due in this period on EC acquisitions£0.00
Box 3Total VAT due (the sum of Boxes 1 and 2)£2777.77
Box 4VAT reclaimed in this period on purchases£0.00
Box 5Net VAT to be paid to Customs or reclaimed by you (Difference between Boxes 3 and 4)£2777.77
Box 6Total value of sales, excluding VAT£497,222
Box 7Total Value of purchases, excluding VAT£400,000
Box 8Total value of EC sales, excluding VAT£0.00
Box 9Total value of EC purchases, excluding VAT£0.00
Source: GOV.UK

How to fill in each box is explained

Box 1 – VAT due on sales, you include the output VAT due on all eligible goods sole in the period covered by the return. For example, your VAT return period is 1 January 2021 to 31 March 2021, you include the output VAT on sales for this period only in Box 1.

Box 6 – you enter the figure of the full selling price of all eligible goods sold and deduct any VAT due on the margin.

Say your total full selling price on all your second-hand goods for the VAT return period is £500,000 and the VAT due on the Margin is £2777.77, you would enter £497,222.23 in Box 6.

Box 7 – you input the full purchase price of all eligible goods bought in the period. say, your total full purchase price is £400,000, you enter this figure in box 7.

Box 8 and 9 – you do not need to include Margin scheme purchases and sales in your return.

Companies House filings

Besides, maintaining good VAT accounting records and submitting your VAT return on time to HMRC, if your VAT registered business is a limited company, you must also deliver your company accounts and confirmation statement to Companies House promptly.

If you require any help with your VAT returns, company accounts and confirmation statement filing, feel free to contact our accountants, they will be more than happy to assist you to comply with your filing requirements.

Leave a Reply

%d bloggers like this: