Using a VAT margin scheme if you’re an agent

There are different rules to follow if you’re using the VAT margin scheme and you’re either:

If you’re an agent using a margin scheme:

If you do not use a margin scheme, you’ll need to declare VAT on the goods, and on your charges to both the seller and the buyer.

When you should use these rules as an agent

You are acting as an agent if you sell eligible goods for or on behalf of other dealers or private sellers and you either:

If you are an auctioneer, you may use these agency rules or the Auctioneers’ scheme.

Agents who can use the scheme (undisclosed agent)

If you’re an agent acting in your own name (sometimes known as an undisclosed agent), you can use a margin scheme when you sell eligible goods.

An undisclosed agent sells goods as principal.

Agents who cannot use the scheme (disclosed agents)

Where you’re an agent not acting in your own name, you will be making a supply of agency services to your clients under the normal VAT rules.

How to work out purchase and selling prices when using an agent

The seller’s purchase price of the goods will be calculated in the normal way.

The seller of the goods should then account for their own sale as normal, including under the margin scheme if the goods are eligible. The seller’s selling price will depend on how the agent charges for their services.

For a disclosed agent the seller’s selling price will be that obtained by the agent from the purchaser of the goods. The agent’s services are supplied separately and should be invoiced and accounted for under normal VAT rules.

For an undisclosed agent the seller’s selling price will be the price that the agent, acting in his own name, pays for the goods before charging any selling agency fees. The normal margin scheme rules for invoicing apply.