The margin scheme is used as a means of reducing the possibility of double taxation on the sale of second-hand goods. This scheme is optional.
It operates by allowing dealers to pay Value-Added Tax (VAT) on the difference between the sale price and the purchase price of the goods.
The margin scheme applies to:
- certain second-hand goods
- works of art
- antiques and collector's items
- second-hand vehicles and second-hand agricultural machinery acquired by dealers as stock-in-trade on or after 1 January 2010.
If you choose not to operate the margin scheme, then the normal VAT rules apply.
Further guidance contains more detailed information on the VAT treatment of the margin scheme.