HMRC internal manual

VAT Margin Schemes

VATMARG02100 - Basic principles: What goods are eligible for the margin schemes?

The VAT (Special Provisions) Order 1995 defines the types of goods that may be bought and sold under the margin schemes. The order reflects the definitions contained in Articles 312 -341 of the Principal VAT Directive. The eligible goods are:

  • second-hand goods,
  • works of art and collectors’ items, and
  • antiques.

(a) Second-hand goods

The order defines these as:

tangible movable property that is suitable for further use as it is or after repair, other than works of art, collectors’ items or antiques and other than precious metals or precious stones as defined by the Member States;

This includes commercial vehicles, but motor cars are covered separately in VATMARG08000.

In most cases, goods which are second-hand in the ordinary usage of the term will clearly fall within this definition. In borderline cases, it might help to look to the purpose of the relief and consider whether the goods have previously borne irrecoverable VAT.

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(b) Works of art and collectors’ items

“work of art “ has the same meaning as in section 21 of the Act

“collectors’ items” means any collection or collector’s piece falling within section 21(5) of the Act, but excluding investment gold coins within the meaning of Note 1(b) and (c) to Group15 of schedule 9 to the Act

A full list of these items is contained in Notice 718 Margin schemes for second-hand goods, works of art, antiques and collectors’ items.

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(c) Antiques

“antiques” means objects other than works of art or collectors’ items, which are more than 100 years old.

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Ineligible goods and the margin schemes

If you find that ineligible goods have been accounted for under a margin scheme, you may assess on the basis of the full sales value (see VATMARG10000). The onus is on the trader to provide satisfactory evidence of an item’s eligibility for the scheme. A list of ineligible goods can be found in Notice 718 The VAT Margin Scheme and global accounting.