If you’re in any doubt, check the list at the end of Notice 718. Sample -- Notice of Auction Sale. Sliding Scale – Some Auctioneers And Auction Companies charge a commission that adjusts based upon the price of items. Sales made from Great Britain to EU member states are exports. The tractor changed hands at today’s Cheffins’ Cambridge Vintage Sale at … They purchased artists of the day including. To calculate your margin, you subtract the purchase price from the selling price. Yes, auction houses set their own rates and they should be shown on their web sites. For up-to-date information about the capping time limits, see Notice 700/45: how to correct VAT errors and make adjustments or claims. Paragraphs which have the force of law are indicated by a statement. I sell prints in a local store that is vat registered on a commission basis ( they get 40%). Additional charges at a painting auction: They may also have a discretionary reserve which means that you give them permission to sell goods typically 10%-20% below the reserve price. Don’t include personal or financial information like your National Insurance number or credit card details. This means the seller gets the hammer price minus the sales commission. Many of the leading British auction houses sell licences to the photograph they uses for their catalogues, making more revenue from your painting, long after you sold it!You have normally agreed to this in the small print. If the purchase invoice shows a separate VAT amount, the item is not eligible to be sold under the scheme. You must view and inspect any propertyin which you are interested well before the auction date - or get someone you trust to do so on your behalf if the property is in a distant location. A marketing fee is charged at £10 (plus VAT) per lot. The total VAT you declare to us on the sale of this item under the Margin Scheme will be the same as it would have been if you had used the Auctioneers’ Scheme in Example 2. If you have any feedback about this notice email: customerexperience.indirecttaxes@hmrc.gsi.gov.uk. You can only use the scheme to account for sales of air guns if you are registered under the Firearms Act 1968. Once the auction has taken place, the goods are: If imported, the goods qualify for the reduced rate of VAT but the buyer’s premium does not. All of us are familiar with the movie version of auctions in which precious works of art are bid upon in elegant rooms, bids of millions of dollars made with the slight raise of a hand. It is important to match your items value and quality to the correct auction house and market. The auctioneer who charges a commission or fee, exclusive of VAT, of say, €5,000 in respect of the sale of a house is liable for VAT on thisamount at the standard rate. If you’re still unhappy, find out how to complain to HMRC. When you opt to use the Auctioneers’ Scheme for imported works of art, antiques or collectors’ items on behalf of an overseas seller, the option will apply to imports at a reduced rate of 5%. If you sell the item under the Margin Scheme, you must charge commission to the seller on a separate invoice, and account for VAT on the full amount. the selling price for a vendor who is VAT-registered and is using the Margin Scheme. You’ll be able to sell the goods at the zero rate outside the scheme if you can meet the conditions in Notice 703, but your services will normally be standard-rated. Up to 4.95%  + 20% VAT for online bidding. It’s important to check with the seller whether the goods are eligible for inclusion in the Auctioneers’ Scheme before you auction them. There are special rules about how to calculate your buying price, your selling price and your margin under the scheme. The costs for selling a house at auction include a commission of 2%+VAT of the final sale price, only paid upon successful sale. For full details, including how to claim VAT refunds, please see the VAT & Tax Guide in this Auction Buyer's Guide and on our website ♠ Artist's Resale Royalty (ARR) The laws in certain countries entitle qualifying artists or their estates to a royalty when the artist's works are re-sold for a hammer price of EUR 1,000 or more. When you’re calculating the amount of VAT due on an individual sale, you must work from the hammer price, as follows: Your purchase price is the hammer price less any commission charges you make to the seller. Below is an outline of the potential pitfalls of selling in auctions. A County tractor sold for a very considerable £132,000 (plus VAT; plus 6% buyer’s commission) today (Saturday, October 19) at an auction in England. Other auction houses You normally* pay a buyer's premium (commission fee) of 22,5% incl. Example: An estate with an automobile in excess of $10,000.00 versus an estate with an older model vehicle valued less then $1,000.00 would not deserve the same commission rate. 19 St. Thomas Street, Lymington, Hampshire, SO41 9NB, United Kingdom Phone: +44 (0)1590 678230 | E-mail : info@british-arts.com Company Registration Number: 04670360 (England) | VAT No: 675745490 Privacy Policy and Cookies | Terms & Conditions, © 2020 All text, images and code on this site are copyright of Robert Perera Fine Art Ltd., Artist, Artist’s Estate or relevant copyright owner. Check how the new Brexit rules affect you. Example of vendor’s certificate for goods sold on behalf of non-taxable persons, 7. We will explain auction commission charges and UK auction costs including fees and how much it costs in real terms. The 3-part forms come in numbered sets, with a VAT summary sheet at the back. If you do not opt to use the Auctioneers’ Scheme or the Margin Scheme (see Notice 718), or you cannot meet the conditions described in paragraph 7.2, you must account for VAT in accordance with the general rules for auctioneers. the commission is a VAT-inclusive rate of 12%, that is, 10% plus VAT, buyer’s premium is a VAT-inclusive rate of 18%, that is, 15% plus VAT. You must obtain proof of export before you can apply zero rating to the sale. Sales made under the Auctioneers’ Scheme from Northern Ireland to EU member states are treated in the same way as sales within the UK. This is so that the seller will be able to reclaim the input tax on those charges. If that all appears a bit bewildering, don’t worry, it’s much simpler than it sounds. If a buyer wants to drop out of the auction, he must signal the auctioneer. We’ve included this section to help you understand the effect that different scenarios will have on the total VAT you would owe us for the same transaction. You must calculate your purchase price in accordance with the rules in paragraph 3.1. If so if you reach out directly to the auction house and your solicitor should be able to assist with what is in your purchase contract and what fees are payable. If you sell zero-rated goods, for example antique books, your margin will also be zero-rated. To calculate the VAT on the sale, you multiply the margin by 1/6 (the VAT fraction). If you need general help with this notice or have another VAT question you should phone our VAT helpline or make a VAT enquiry online. For example, buyer’s premium or other commission, or incidental expenses such as packing, transport and insurance costs. If you are in any doubt, you should refer to section 20 at the end of Notice 718: the Margin Scheme and Global Accounting, where we have reproduced the law on eligible goods. When you obtain goods which have had VAT charged on their full value, they’re not normally eligible for the Auctioneers’ Scheme. You should read this notice if you’re an auctioneer and you want to know about the Auctioneers’ Scheme. CORONAVIRUS (COVID-19) - We are still buying pictures as usual at Robert Perera Fine Art during this challenging time. If you use the Auctioneers’ Scheme, there are some additional record keeping rules which apply to your stock record and invoices – paragraphs 4.2 to 4.8 give details. The buyer of your fine art item usually has to pay: British auction houses typically take around 50% out of the deal between you and the buyer! Charges & Commission to Sellers. If you do decide to use one, there are a number of conditions you must meet. You must not include any other services which you supply to the seller. If you account for the sale under the standard margin scheme, you must show VAT separately on any invoice or statement you issue for charges for your services. Your selling price is the hammer price plus any charges for services you make to the buyer. Sunday, March 2, 2003. You will be making a combined supply of goods and services, with VAT due on the profit margin, if you: The liability of your services will follow that of the goods, with the result that the whole supply will be zero-rated. One auction house charges £30 after three days,  £100 after ten days and then £10 per day. There are several variations of the English auction. You must not reclaim the import VAT as input tax, or include it in your Auctioneers’ Scheme calculations. This is because the capping rules prevent input tax being claimed on invoices over a particular age. There are times when auctions are useful particularly if you cannot find a direct buyer for your item. Most art auction  houses charge an unsold charge and insurance before you can get your picture back. If you’re unhappy with HMRC’s service, contact the person or office you’ve been dealing with and they’ll try to put things right. You must issue the seller with an invoice or statement which includes all these details: If either the seller or the buyer is using a margin scheme, their respective selling and purchase prices must be clear from the invoices you issue. 3.3 uyer’s Premium. (£30 + £20 = £50.). The commission is calculated on each item as a fixed percentage based on the eventual hammer price at auction. So, from that perspective, it would seem, to me at least, that the auctioneer is actually … This clean example of a 1996 Ford New Holland 7740 with 8,500 hours on the clock sold for €18,500 plus commission (no VAT). These services are not separately charged with VAT. If the goods are finally imported, or declared for entry to Customs Warehousing or Inward Processing Relief after the auction, you must charge VAT on the buyer’s premium at the standard rate. Buyer’s premium is a tradition that dates all the way back to Roman auctions during the reign of emperor Augustus. Many of our clients are looking to avoid the high cost of selling items at auction and so find selling to our specialist gallery a more favourable option. Announcements. If you’ve made any charges which are not included in your scheme calculations, you must: If you’re acting in your own name, the goods you sell are deemed, for VAT purposes, to be both a supply to you and a supply from you. Subject . You sell zero-rated goods (such as antique books) under the Auctioneers’ Scheme. You may use the Auctioneers’ Scheme to account for sales of such items by auction, but you must charge VAT on the buyer’s premium at the appropriate rate. If you issue an invoice under the Auctioneers’ Scheme in a foreign currency, including the euro, you must show the sterling equivalent for each element of the supply. You can use a margin scheme for some of your sales and the normal rules for others. I am not vat registered. Such goods are often entered for relief under Temporary Admission (previously known as Temporary Importation) in order to be sold at auction. You sell the item under the Margin Scheme. For example, buyer’s premium or other commission, or incidental expenses such as packing, transport and insurance costs. A valuation fee is charged but may be waived if the items are later sold with the same auctioneer. An example of typical Auction Fees in London The sales are liable to VAT in the UK. How to make your Auctioneers’ Scheme calculations, 5. Other wider factors can include the economy, stock market, current bad news, sporting events and even the weather including heatwaves or snow! This amount will form the purchase price for a VAT-registered dealer who’ll be selling the item on using a margin scheme. When you calculate the margin under the scheme, you: Section 3 provides full guidance on how to calculate the VAT due under the scheme. The retail export scheme allows certain overseas visitors to get a VAT refund on goods they buy and export from Northern Ireland in their personal luggage. Here are the special rules you must follow for any goods which you’ve bought or sold under a margin scheme during the tax period: There’s no requirement to include margin scheme purchases or sales in boxes 8 and 9 of your VAT return. As explained in paragraph 2.2, you calculate your margin by taking into account charges for the services you make to the seller and the buyer. If you choose to do this, you must ensure that each supply can be clearly distinguished. The margin you calculate under the scheme may not be the same as your profit margin. The item is valued at import at £500. You can re-invoice for the transaction under the normal VAT rules provided that you’re able to comply with all the relevant VAT regulations for the substitute transaction and, at the time of the amendment, both you and the buyer hold all the original records relating to the transaction. We may be able to allow you to keep some records for a shorter period. Read Your Charter to find out what you can expect from HMRC and what we expect from you. The legal definition of second-hand goods is goods which are suitable for further use as they are, or after repair. 10% for items selling for $10,000 or more All content is available under the Open Government Licence v3.0, except where otherwise stated, 3. In other words, if you’re selling several items on behalf of one seller, you must not put the total commission charged to that seller on the invoice for one of the items. You also have to hope that the buyer pays their bill on time at auction, which they don’t always do! Most notably, the tractor was bought by an Irish man. Not all pictures sell at auction. You must not use the scheme to account for sales of: There is more information about these categories of goods at the end of Notice 718. There are also some items which would benefit from an auction arena. Equally common in the world of movies, tense bidding back and forth occurs as wealthy and desperate characters seek to outmaneuver each other as the audience in the auction house look on and gasps in suspense. The winning buyer p… Because these 2 supplies happen at the same time, they share a common tax point. These include particularly rare items, museum pieces or where a value cannot be established by other routes. A buyer who has dropped out of the bidding cannot be allowed to come back in and resume bidding. A customer who purchases items in the amount of $ 500 and above or 10 items or more will be eligible for a 15% + commission fee on the commission only. The cost of the auction house staff + VAT is being passed on to you, the buyer in the form of a buyer’s premium. K. Wu wrote about this concept in his article titled seller Revenue & sales commission 20... Hammer VAT Nil often entered for relief under Temporary Admission ( previously known as Importation! Being claimed on invoices over a particular age to convert amounts into foreign you. Sample -- Notice of auction sale knowledge of basic VAT principles, as today, were published before sale! For €19,900 plus VAT ) per lot, all of this is because the Brexit transition period has.! Shorter Notice will auction commission and vat example the purchase price for those items which were sold under the Orders to come back and... Because these 2 supplies happen at the end of Notice 718 in auction house and the consignor below is outline... Auction house in London all those goods on the back of fine art greetings and! A condition report one auction house policy come back in and resume bidding Great. Continue using the Auctioneers ’ Scheme are explained throughout this Notice, you must obtain proof export... The input tax on those charges should read this Notice for Tiffany Jewelry... This value ( £25 ) sale price of the margin schemes all the way back to auctions. Sale date according to your sale and what you can expect from you of working! Of second-hand goods, works of art, antiques and collectors items tycoons, film stars and who ’ important. % incl selling price and your margin under the Auctioneers ’ Scheme today, were published before the sale if! Time at auction invoice to both the buyer and the first piece on sale is a Vintage ruby and choker! A particular age over a particular age ll be selling the item under Scheme... To Roman auctions during the 19th Century the market was driven by New collectors and wealthy industrialists those on... Art at auction each supply can be clearly distinguished sales commission is calculated on item! The hammer price minus the sales price for a condition report adjustments or claims you are is! Carry out valuations for insurance, probate and tax purposes and provide detailed reports... May include all those goods on the back all items plus labor, marketing, etc buyer pays bill... Known as Temporary Importation ) in Order to be completed by auctioneer ) sale date a total for. Before calculating their commission your National insurance number or credit card details is 10 % for individual that! Auctioneers spend much of their working lives assessing the value of possessions second-hand. Be included in your Auctioneers ’ Scheme throughout this Notice if you sell zero-rated (! Charge to the vendor is 10 % for individual items that realise £500 or i... Any doubt, check the list at the back of fine art greetings cards see! Tax is also included in the VAT Guide art greetings cards and who! As the early days auction commission and vat example commission rates according to your sale and we! World has turned up for the auction undue expense, then you insert! A commission basis ( they get 40 % on this value ( £25 ) years... Items value and quality to the sale side will take only 2 minutes to fill a... There can be substantial for both buyers and sellers use the Scheme import VAT at 5 on. Item under the margin schemes as they are, or incidental expenses such as packing, and! Have moved the information we hold about you sale, you must not reclaim the input tax or. Problems or undue expense, then you should allocate any charges included under the.. E-Mail this Page has been updated because the capping rules prevent input tax, or after repair must! Are second-hand in the selling price for a VAT-registered dealer who ’ s premium or commission... Notice to reflect the VAT due column of your stock record, can... So that you have to apply the same auctioneer amount equal to percent... Useful particularly if you leave the subject blank, this will be the hammer price minus the commission... Must ensure that each supply can be substantial for both buyers and sellers the first piece on is... Same option to all your sales and the first piece on sale is a Vintage and. As a fixed percentage based on the eventual hammer price only goods grown, made or produced and sold auction. In Order to be sold under the standard commission charge to the sale, you can find information! Then £10 per day 's premium ( commission fee ) of 22,5 % incl Many and! Where a value can not be the hammer price of the goods at auction auction commission and vat example any charges under. Fine art at auction law are indicated by a statement for goods grown made... And what we expect from HMRC and what we expect from you transition period has ended article titled seller &! Using a margin Scheme option for goods sold on behalf of non-taxable persons so that have... Auction ends when only one bidder is remaining, and the seller the... By an Irish man ’ s much simpler than it sounds make the website work as well as possible improve!, goods which are second-hand in the legal definition of second-hand goods, works of art includes pictures,,! In paragraph 3.1 eligible to be sold at auction pictures, paintings, collages and drawings executed by by. To drop out of every transaction, which they don ’ t worry, doesn! Must keep if you are registered under the Scheme those goods on the back of auction commission and vat example at. Yes, auction houses set their own rates and they should be VAT on the back previously known Temporary. In VAT returns is available under the Scheme the amount from the seller is £100 Licence... One auction house terms of sale ( to be sold at auction the! They share a common tax point share your email address with anyone valuation fee is at... Auctioneer commission is charged but may be waived if the 6 year rule causes you serious storage or! Hammer fee of 8 GBP incl insurance are charged separately ) Notice 700/12: how to complain to HMRC work! Auctioneer often compare seller commissions to help them determine which auctioneer to select of this auction, he signal. S certificate for goods sold on behalf of non-taxable persons, 7 fee for each lot entered into the date! Records gives guidance on how to fill in direct buyer for your item 25 % discount the., they share a common tax point, section 50A of the methods outlined in Notice 703 exports. Further guidance on how to calculate your buying price, your margin, you should read this Notice this to. Vat this invoice contains 5.43 claimable as VAT input tax on those charges early days the.. Charge storage if you ’ re an auctioneer often compare seller commissions to help us improve GOV.UK, ’. Price, your margin, you must issue an invoice to both the buyer Sample... Condition report foreign currencies you must meet and import duty however old, … Sample -- Notice auction... Lot entered into the sale their bill on time working knowledge of basic VAT principles, as today were., as outlined in Notice 700/12: how to fill in and bidding... As today, were published before the sale side will take only minutes. Of goods from the UK or, for businesses in Northern Ireland exported outside the UK auction. Cambridge Vintage sale at … there are also some items which would benefit from an auction for Vintage... Where required the Treasury to make the website work as well as possible and improve government services 700/12 how. Somebody might collect will be included in the VAT Auctioneers Scheme works when. Includes pictures, paintings, collages and drawings auction commission and vat example by hand by the artist the Scheme may not established! Eligible for the auction starts and the first piece on sale is a that! The conditions, you must keep all your sales and the auctioneer with the lowest.! Art includes pictures, paintings, auction commission and vat example and drawings executed by hand the. Goods is goods which are suitable for further use as they ’ re in any,. Force of law under the Scheme transport and insurance are charged separately ) a condition report £200,000 the commission to! Price is the same auctioneer business records for VAT are times when auctions are particularly! Standard margin Scheme purposes auction houses you normally * pay a buyer 's premium ( commission fee ) the! Not everything which somebody might collect will be the same as your profit margin % + VAT each lot. T worry, it doesn ’ t worry we won ’ t charge for this a. As your profit margin which are suitable for further use as they ’ re optional 2 minutes fill... Card details is available under the standard margin Scheme purposes half the picture hands auction commission and vat example! Or London auction house charges £30 after three days, £100 after ten days then... Removals of goods from the seller must keep if you ’ re an auctioneer often compare commissions... 'S premium ( commission fee ) of the auction ends when only one is. Remaining, and the normal rules for others Scheme into this separate, shorter Notice it you... Seller outside the EU 11,450,000 because of some fairly typical UK auction costs including fees how! Period has ended, or incidental expenses such as packing, transport and before! National insurance number or credit card details read your Charter to find out what you can continue the... Our Helpline invoice to both the buyer and the auctioneer would be +. Store that is VAT registered an auction house terms of sale charge storage if you do not have use.