Paying VAT as a seller in the UK?

[sussex-coast]

I'm in the UK (always have been). I'm not a business, just selling personal items. A few weeks ago I looked into why my totals were so low after fees and saw that I'm being hit with VAT on every sale. Very few of my items are going abroad so I don't understand? Am I meant to have ticked a box somewhere to say I'm VAT exempt or does every seller pay 20% VAT on items sent within the UK?

[jazzsaxboy]

If you go to an auction and buy a second hand power tool the auction house will charge you 20% VAT on the sale price . So the tax man wins twice. When it's new and when it's sold second hand. It is total rip off.  EBay however charge you 20% vat on the fees only as a private seller. The fees are a total rip off too.

[papso22]

You call it a rip off, I call it the way the law works.

[tommystrezures]

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@jazzsaxboy wrote:

If you go to an auction and buy a second hand power tool the auction house will charge you 20% VAT on the sale price . So the tax man wins twice. When it's new and when it's sold second hand. It is total rip off.  EBay however charge you 20% vat on the fees only as a private seller. The fees are a total rip off too.

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That is incorrect if you purchase at an auction house, the VAT  is ONLY paid on the purchase commission, this is the same as on ebay.  YOu are not paying VAT twice on the actual item, but for the service provided by the relevant platform you purchase from. If a company has turnover of £85,000 (or soon to be £90,000) then they must be VAT registered and charge vat at the prevailing rate.  As @papso22  it is the way the law works.

You should be thankful you don't live in Hungary where the VAT rate is 27%, probably the highest in Europe!

[papso22]

And most countries with VAT have a much lower registration threshold than the UK, so nearly all businesses are VAT registered and have to charge VAT.

[jazzsaxboy]

I'm afraid you are wrong. I have paid VAT on top of the purchase price. The seller pays the fees. Check you facts before replying.

[papso22]

The exact ramifications of when VAT may, or may not, be charged, depend on may factors, some of which are set out on this auctioneers website:

https://www.williamgeorge.com/vat

[jazzsaxboy]

Well it did on the occasion I bought something, so the tax man won on that occasion. Tax, more tax and lies.

[4_bathrooms]

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@jazzsaxboy wrote:
Well it did on the occasion I bought something, so the tax man won on that occasion. Tax, more tax and lies.

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You were charged VAT because the seller was VAT registered; you pay VAT on anything you purchase from a VAT registered business (well, except zero-rated and exempt items). It's the same on eBay except when you bid on/purchase an item being sold by a VAT registered seller the final bid/price you see already includes the VAT element. 

In general where prices are displayed to consumers (non-businesses) they must include the VAT element; this means most people don't realise how much tax they're actually paying. However, where prices are being displayed to businesses (VAT registered or not) there is no such requirement for the VAT element to be included. A good example of this is eBay's fees for private sellers and eBay's fees for business sellers; the former are displayed including VAT whilst the latter are displayed excluding VAT.

If the auction house advertises itself to traders for buying and selling then it isn't obliged to display any prices including VAT; this includes the auction houses' own fees and bid amounts on items being sold by VAT registered businesses. So, if you were bidding on an item that was being sold by a VAT registered business the final sale price would be subject to VAT. You would need to check the seller's VAT registration status with the auction house and/or the bidder before committing to a bid. 

[jazzsaxboy]

You seem to be getting a bit too overwhelmed by this. You just confirmed what I said from the start. If you hadn't gone off on one before checking your facts you wouldn't have to keep responding trying to prove you were right and I was wrong. Just accept you were wrong to start with. I know when VAT is charged. I was a company director for years so it was my job to know. I'll accept your apology and you can stop wasting your time googling information. End of discussion. It's getting boring now.

Sent from Outlook for Android<>

[thesmi42]

"keep responding "

That's odd, unless I'm missing something, that particular poster has only responded once on this thread.

Anyway, unlike yourself not everyone knows how VAT works so it can be useful to have reponses which set out the various principles involved, such as VAT being applied at each stage in the supply of goods and services.

[123cherryj]

Sent from my iPhone

[123cherryj]

I’m just not on the hub very often and actually phoned EBay so an advisor updated me.

Thanks

Cherry
Sent from my iPhone

[jazzsaxboy]

My apologies Cherry. Got you mixed up with a previous chat.

Ric.

Sent from Outlook for Android<>

[4_bathrooms]

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@jazzsaxboy wrote:
You seem to be getting a bit too overwhelmed by this. 

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Not at all.

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@jazzsaxboy wrote:
You just confirmed what I said from the start. 

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No, I didn't. You stated:

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@jazzsaxboy wrote:
If you go to an auction and buy a second hand power tool the auction house will charge you 20% VAT on the sale price

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I was merely pointing out it is not the auction house that will be charging 20% VAT on the sale price; it is the (VAT registered) seller of the item that will be. If the auction house charges a buyers' premium that is also subject to VAT. However, the buyers' premium is a fee charged by the auction house; i.e. the VAT charged on that fee is not VAT charged on the final hammer price.

You also stated:

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@jazzsaxboy wrote:
So the tax man wins twice. When it's new and when it's sold second hand. It is total rip off.

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A VAT registered business charges VAT on any VATable supply they make; where the supply is goods it matters not whether they are new or used. However, businesses that sell second-hand goods can opt to use a margin scheme, this means they pay VAT at 16.67% (one sixth) of the difference between what they paid for an item and what they sold it for. This is handy because many such businesses source their goods from private sellers; as private sellers are never VAT registered there is no input VAT the business could reclaim on those purchases. The margin scheme makes VAT accounting much easier for such a business and reduces their tax burden. For example, if such a business purchased a second-hand item for £100 and sold it to a private buyer for £150 under the margin scheme the total VAT they would need to remit would be £8.34 (16.67% of £50). If they weren't using the margin scheme the total VAT they would need to remit would be £25 (£150/1.2 = £125).

The seller you purchased from at the auction clearly wasn't using the margin scheme. At a guess you purchased from a trader who buys joblots then splits them when selling. As they would have purchased their stock from a (VAT registered) business they could not have used the margin scheme due to VAT being charged on their purchase. Depending what (if any) the buyers' premium was the only party that possibly ripped anyone off was the auction house as they would have likely charged the seller commission and the buyer a premium. 

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@jazzsaxboy wrote:
If you hadn't gone off on one before checking your facts you wouldn't have to keep responding trying to prove you were right and I was wrong. Just accept you were wrong to start with...

... I'll accept your apology and you can stop wasting your time googling information.

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My previous reply was the first one I ever made to this thread...maybe you should be the one checking facts and apologising?

[pj_eden]

Not striclty true, auction house can oly charge VAT on the sale price if the seller of the power tool is VAT registered. If selling on behlaf of a non-VAT registered seller they can leaglly only charge VAT on their Fees. (Most auction houses charge a buyers premium).

Say auction house charges 10 buyers premium (+vat) and 10 commision on sales (+vat)

Example 1

A private non-VAT regeisterd seller puts a drill in this week auction

You win the drill at a bid of £20

You pay £20 + 10% buyers premium (£2) + VAT on the buyers premium (40p)

Auction House charge 10% commission (£2) + VAT on that commission (40p)
The seller gets £17.60 to have an evening in the Pub.
Auction House 80p to those wonderful people at HMRC
Auction House gets £4 for a shandy and packet of pork scratchings to share between 6

Example 2

A VAT registerd company specialing in 2nd hand power tools puts a drill in this weeks auction

You win the drill at a bid of £20

You pay £20 + VAT (£4) + 10% buyers premium (£2) + VAT on the buyers premium (40p)

Auction House charge 10% commission (£2) + VAT on that commission (40p)
The seller gets £23.60

Seller Gives £4 to HMRC and gets £17.60 to buy His Missus some flowers as he's been if the office from 6am - 10pm every night this week sorting 2nd hand power tools for the next auction
Auction House give 80p to HMRC
Auction House gets £4 for a fresh jar of Asada Smart Price Coffee and a Bag of sugar

[gadgeteering]

So if I sell something for £10

I pay the fees ebay wants and pay postage and any profit after that I also have to pay 20% to hmrc?

[pj_eden]

Partly depnds on 1 if you are a business and 2 if you are VAT registerd, if pboth of these are true you should lareday be charging 20% vat on itms you sell and paying that to HMRC.

If you are a private seller you do not pay any additional VAT 

[redendall]

Hi there

So, with selling fees being dropped in the UK for all but 'motors', if I sell a luxury watch as a private seller for say £6k to somebody also based in the UK, would I expect to have to pay any VAT, or any ebay fees assuming a standard listing? 

Thanks

[ett1954]

You are a private seller so there would be no fees to pay on a sale of £6K on your luxury watch, not any VAT.

If however your profit on that watch was more than £3,000 you should inform HMRC as you may be liable for Capital Gains Tax.

[redendall]

Hi there

Thats great - thanks for the clarification.

Best wishes