For Auctioneers: 5 points to know when the seller IS a vendor
If you're an auctioneer, you will be required to deal with VAT in 2 special ways.
These 2 ways are:
1. If the seller you're acting on behalf of, ISN'T a vendor; and
2. If the seller you're acting on behalf of, IS a vendor.
Now having mentioned them, here are 5 very important points to remember when the seller you're acting on behalf of IS a vendor...
When the seller IS a vendor
When the seller is a vendor, there are 5 important points to remember. They are:
If the goods the principal is supplying aren't made in the course or the furtherance of his enterprise, you and the principal can arrange that you can charge Vat on the goods you sell.
For example, Mr. Brown owns a business that sells gas and is VAT registered.
He sells his old home furniture at an auction> Now because these items being sold are his own private ones, and so don't belong to the business, VAT doesn't have to be charged on the sale of it.
But Mr. Brown arranges with the auctioneer that he will charge VAT, as he is registered.
The furniture is sold including VAT, and the auctioneer the VAT over on his VAT return, after which he deducts his fee before paying the balance over to MR. Brown (net of VAT).
This is then treated as if you, the auctioneer, supplied the goods in the course of your enterprise (see the example above).
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You must account for and pay over the VAT on your VAT return.
If you and the seller haven't made an arrangement, then you don't charge any VAT on the sale of the goods.
Do you want to learn what the last point is? Then go to chapter A02: Agents and Auctioneers in your Practical VAT Loose Leaf Service handbook, otherwise click here to get your hands on it today.