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Revealed: Your Vat duties as an auctioneer

by , 27 August 2013
If you're classed as an auctioneer, there are certain rules you must follow when managing Vat. Read on to discover what your Vat responsibilities as an auctioneer are so you can comply with the Vat Act.

According to the Practical Vat Loose Leaf Service, you'll be classified an auctioneer if:

  • You carry on a business that includes supplying goods by auction;
  • You supply goods by auction for or on behalf of another person; or
  • You carry on a business as an agent, a fresh produce agent or livestock agent, as defined in the Agricultural Produce Agents Act.

If you tick any of these boxes, you must account for Vat in the following ways:
 

  1. If the seller you're acting on behalf of, isn't a vendor
  2. If the seller you're acting on behalf of, is a vendor.

Let's take a closer look at how you'll deal with Vat in these two situations.

Are you an auctioneer? Here are your Vat responsibilities

Keep these five points in mind when the seller isn't a vendor:

#1: You and the seller can arrange to charge Vat on the goods you sell.

For example, Mrs Dannon owns a boutique and isn't registered for Vat. At the end of every year, Mrs Dannon holds an auction to sell the excess stock.

Even though she's not registered for Vat, she and the auctioneer arrange Vat to be charged on the sale of the goods. The goods are sold for R114 000 (including Vat) and the auctioneer pays the Vat of R14 000 over to SARS on his Vat return. He takes his fee and pays Mrs Dannon the balance, net of Vat.

#2: This is then treated as if you, the auctioneer, have supplied the goods in the course of your enterprise as this was the case in the above example.

#3: You must account for and pay over the Vat on your VAT return.

#4: You must keep records indicating the name of the seller, as well as a copy of his or her ID document, a description of the goods, their quantity, the price you paid as well as the date you acquired them.

#5: If you and the seller haven't made such an arrangement, you can't charge any Vat on the sale of the goods – even if you are Vat registered.

If the seller you're acting on behalf of is a vendor, keep these five points in mind:

#1: If the goods the principal (person in whose name and on whose behalf the agent acts) is supplying aren't made in the course of his enterprise, you and the principal can arrange to charge Vat on the goods you sell.

For example, Mrs Janetta owns a business which sells gas and is Vat registered. She sells her old home furniture at an auction. Because this furniture is her private goods and doesn't belong to her business, Vat does NOT have to be charged on the sale of it.

But Mrs Janetta arranges with the auctioneer to charge Vat, as he is registered.
The furniture sells for R22 800 including R2 800 Vat. The auctioneer pays the R2 800 over on his Vat return and after deducting his fee, pays the balance, net of Vat to Mrs Janetta.

#2: This is then treated as if you, the auctioneer, supplied the goods in the course of your enterprise as is the case in the above example.

#3: You must account for and pay over the Vat on your Vat Return.

#4: If you and the seller haven't made an arrangement, you don't charge any Vat on the sale of the goods.

#5: If the goods supplied by the vendor are in the course of his enterprise, you can't make any similar arrangement with him. In this case, you'll charge the Vat and pay the full amount, including the Vat over to the seller-principal.

There you have it. If you're an auctioneer, make sure you stick to your Vat duties so you can comply with the Vat Act.



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