VATMARG05000 - Agents and the margin schemes
Use of the schemes by agents
Supplies of goods through selling agents (including auctioneers) who act in their own names are treated for VAT purposes as supplies both to them and by them in line with section 47(2A) of the VAT Act 1994 which states:
Agents etc
47.
(2A) Where, in the case of any supply of goods to which subsection (1) above does not apply, goods are supplied through an agent who acts in its own name, the supply shall be treated both as a supply to the agent and as a supply by the agent.
You will find more on this in VTAXPER61500.
Invoices issued in agents own name
Those who choose to issue invoices in their own names for sales are treated as making the supply of the goods and must account for the VAT on the supply as well as the VAT on the supply of their services, irrespective of the VAT status of the vendor.
However, auctioneers and agents acting in this way may use the margin scheme or auctioneers’ scheme (see VATMARG04000) if they are selling eligible goods and they can meet the conditions of the schemes (see VATMARG02150).
This means that they will account for VAT on a margin which is effectively made up of their commission, and the liability of the goods will remain neutral.
Agents have an option when calculating their margin in respect of UK domestic sales to invoice charges to the seller separately, or include the charges in the sale of the goods: Notice 700 The VAT guide refers.
For non-EU or intra community supplies agents must include their charges in the sale to seller of the goods. Notice 700 refers.
Notice 718 The VAT Margin Scheme and global accounting explains how agents should calculate their VAT under the margin scheme. Advice on the records an agent must keep is in also in the notice.
Further information on the VAT rules for agents is contained in Notice 700 The VAT guide.