VAT margin schemes

Keeping records

You must keep the usual VAT records when you use a margin scheme.

You must also keep:

  • a stockbook that tracks each item sold under the margin scheme individually
  • copies of purchase and sales invoices for all items

Stockbook

You must record certain information for each item you buy and sell that you want to use a margin scheme for.

Purchases Sales
Stock number in numerical sequence -
Date of purchase Date of sale
Purchase invoice number (unless you made out the purchase invoice yourself) Sales invoice number
Purchase price Selling price, or method of disposal
Name of seller Name of buyer
Description of the item -
- Margin on sale (sales price less purchase price)
- VAT due (16.67% or one-sixth)

You must keep VAT records for 6 years. You have to keep records until you sell the item for any stock you bought more than 6 years ago that you plan to sell under the margin scheme.

Invoices

To use the margin scheme, you must have invoices for each item that meet the VAT margin scheme requirements.

The margin scheme invoice requirements are not the same as the general VAT invoice requirements.

You must have:

  • an invoice from the seller when you bought the item
  • a copy of the invoice you gave to the buyer when you sold the item

Buying

When you buy something you plan to sell under a margin scheme, you must get an invoice from the seller that includes:

  • date
  • seller’s name and address
  • your name and address, or that of your business
  • the item’s unique stockbook number (if you bought the item from another VAT-registered business)
  • invoice number (unless you made out the purchase invoice yourself)
  • item description
  • total price - you must not add any other costs to this price
  • if you bought the item from another VAT-registered business, any of the following: ‘margin scheme - second hand goods’, ‘margin scheme - works of art’ or ‘margin scheme - collectors’ items and antiques’

Selling

When you sell something you plan to claim for under a VAT margin scheme, you must give the buyer an invoice that includes:

  • date
  • your name, address and VAT registration number
  • the buyer’s name and address, or that of their business
  • the item’s unique stock book number
  • invoice number
  • item description
  • total price - you must not show VAT separately
  • any of the following: ‘margin scheme - second hand goods’, ‘margin scheme - works of art’ or ‘margin scheme - collectors’ items and antiques’

There are special rules for using the margin scheme for goods bought and sold within the EU and outside the EU.