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HMRC internal manual

VAT Margin Schemes

Buying and selling within the European Community

What does this section cover?

This section, together with Notice 718 The VAT Margin Scheme and global accounting, covers the treatment of intra-EC transactions for all three schemes (margin scheme, global accounting & auctioneers’ scheme).

The margin scheme is operated in broadly similar terms throughout the EC; and sales made under the three schemes to another member-state should be treated in the same way as sales within the UK.

For information on transactions not relating to the margin schemes, you should refer to VATSM and Notice 725 The Single Market.

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Goods bought from dealers in other Member States

Eligible goods bought under the three schemes from dealers in other Member States can be entered into the UK scheme. Further details are in Notice 718 The VAT Margin Scheme and global accounting.

HMRC cannot give rulings on VAT regulations in other Member States and businesses should clarify the treatment with their EC supplier before entering goods in to the UK margin schemes.

How the EC Invoicing Directive affected invoicing under the scheme

Since 1 January 2004, following implementation of the EC VAT Invoicing Directive (2001/115/EC) in all Member States, margin scheme invoices have had to include a reference to Article 26 or 26a, to corresponding national provisions or to any other indication that the margin scheme will apply.

Customer’s VAT registration number on suppliers invoices

The Invoicing Directive gives Member States the option to require that invoices for supplies in their territories must show the customer’s VAT registration number. The UK has not taken up this option but other Member States have. This means that dealers may receive an invoice for supplies from another Member State, which includes both the margin scheme declaration and their VAT registration number. It may not be clear whether the supply has been zero-rated under the supply and acquisition rules, or supplied under the margin scheme.

You may come across such invoices during assurance visits, and they may have been included in the margin scheme. If a margin scheme declaration appears on the invoice, it is likely that the supply has been made under the scheme. However, if you are in any doubt you should check that the dealer has confirmed with his supplier that the supply has been made under the scheme. If you are still in any doubt that the supply is eligible for the margin scheme, you may wish to check the EC Sales List or send a mutual assistance enquiry through the UK VAT Central Liaison Office (CLO) at VAT International.

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Selling goods at auction in another Member State

Goods removed from the UK for sale at an auction in another Member State are classed as transfer of own goods. From 1 January 1993, the transfer of goods within the same legal entity from one EC Member State to another is deemed to be a supply of goods for VAT purposes.

Notice 718 gives further information on transfer of own goods. You should also refer to Notice 725.

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EC sales lists

Goods supplied under the three margin schemes are taxed in the UK and are not eligible for zero-rating. Therefore, an EC sales list will not be appropriate.

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For Intrastat purposes, margin scheme goods are subject to VAT in the country of origin. There is no requirement to include them in boxes 8 and 9 of VAT 100 (GOV.UK website) or on a supplementary declaration.

Guidance on intra EC transactions can be seen in the following public notices: