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The VAT Margin Scheme & Global Accounting

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MrsRonnie
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The VAT Margin Scheme & Global Accounting

#152892

Postby MrsRonnie » July 17th, 2018, 1:15 pm

Hi All

This post/question is specifically about the Global Accounting scheme (which is a simplified version of the VAT Margin Scheme). If you haven't heard of the scheme, you're unlikely to be able to help (which is a shame, because I haven't been able to find anyone who's heard of the Global Accounting scheme so far).

In order to use the Global Accounting Scheme, your VAT registered suppliers have to issue an invoice with the statement "Global Accounting Invoice". According to HMRC, this just involves phoning up (in our case) the auction houses where we buy our goods and asking them to add this statement to the bottom of their invoices.

In reality, the auction houses use the Margin Scheme and have the statement "VAT Margin Scheme" on their invoices as standard.
As they use a template and issue hundreds of invoices at a time, it isn't practical for them to issue a bespoke invoice to us. I haven't spoken to one auction house yet who has heard of the Global scheme, although they all know about the Margin Scheme.

So that means we can't use the Global Accounting Scheme, which is by far the best scheme for us to be using. Instead, we will have to use the Margin Scheme which involves keeping an individual record of every item we buy and sell, and working out an individual cost price for items that we have bought in bulk lots. Hours of work, in other words. If we went on to the Standard VAT Scheme, we wouldn't be making any profit as we work on small margins.

Has anyone come across this, and does anyone have any suggestions please on how we can get around this? AND - a more pertinent question in all probability - does anyone know somebody who has ever managed to use the Global Accounting Scheme successfully?

MTIA

Ronnie

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Re: The VAT Margin Scheme & Global Accounting

#152947

Postby Slarti » July 17th, 2018, 4:35 pm

MrsRonnie wrote:Hi All

This post/question is specifically about the Global Accounting scheme (which is a simplified version of the VAT Margin Scheme). If you haven't heard of the scheme, you're unlikely to be able to help


I've done work setting up and modifying accounting systems for very many companies, home and abroad, including those who import and export goods and services and I've never heard of it. Admittedly, most of the businesses that I work with are either at the top end of medium or large enterprises.

But you could ask your suppliers to add Global Accounting Invoice as the last line of your address. I've seen some very funny things added to addresses so as to allow strange exceptions to normal practice.


Slarti

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Re: The VAT Margin Scheme & Global Accounting

#152950

Postby Slarti » July 17th, 2018, 4:38 pm

Also, reading https://www.gov.uk/government/publicati ... accounting it says that the supplier's invoice must not show VAT separately. Surely any VAT registered auction house would do this?

Slarti

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Re: The VAT Margin Scheme & Global Accounting

#152968

Postby PinkDalek » July 17th, 2018, 5:42 pm

Hello again MrsRonnie

MrsRonnie wrote:… This post/question is specifically about the Global Accounting scheme (which is a simplified version of the VAT Margin Scheme). If you haven't heard of the scheme, you're unlikely to be able to help (which is a shame, because I haven't been able to find anyone who's heard of the Global Accounting scheme so far).

In order to use the Global Accounting Scheme, your VAT registered suppliers have to issue an invoice with the statement "Global Accounting Invoice". According to HMRC, this just involves phoning up (in our case) the auction houses where we buy our goods and asking them to add this statement to the bottom of their invoices. …

Has anyone come across this, and does anyone have any suggestions please on how we can get around this? AND - a more pertinent question in all probability - does anyone know somebody who has ever managed to use the Global Accounting Scheme successfully?


I'm familiar with the Margin Scheme (and the Auctioneers’ Scheme) but not the Global Accounting Scheme.

However, I've looked here 11. The margin schemes and buying and selling at auction https://www.gov.uk/government/publicati ... at-auction.

It includes If you intend to use the Margin Scheme or Global Accounting for the onward sale of goods you have bought at auction, you must check whether the goods are eligible..

Further on, 15.3 What details must be included on purchase invoices? does include Purchase invoices must include: ... and, for goods purchased from another VAT-registered dealer: the statement “Global Accounting Invoice” so at least what you've been told appears to be correct.

No help really, sorry.

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Re: The VAT Margin Scheme & Global Accounting

#153033

Postby MrsRonnie » July 17th, 2018, 9:28 pm

I think Slarti's answer (add it to the bottom of the address) may be the way to go, if we can get away with it like that. I guess it doesn't say where it needs to be in the Notice.

Slarti - most auction houses use the Margin Scheme and don't show VAT separately. VAT for Other Services (such as carriage charges or the use of an online bidding platform) can be shown separately, but the actual cost of goods (which includes the buyer's premium) is displayed without VAT shown separately.

In general terms, using the Margin Scheme means that you only pay VAT on the profit you make on an item. They are very strict on how you calculate the Cost of Goods - it is the Hammer Price + Buyer's Premium only.

However, in order to use the Margin Scheme, each item has to be costed individually and the sale price also has to be logged individually. This is fine for small volumes of sales, but a lot of work when you are selling hundreds of items a month.

The Global Accounting Scheme is supposed to make it simpler. The total Cost of Goods purchased in any particular month is taken away from the total eligible sales for the month, and you pay VAT on the resulting profit. It means you can buy a bulk lot in, say, January and it doesn't matter whether you sell it that month or in a year (which is what realistically happens). It also means that you don't have to work out the individual cost of each item that you have bought in a bulk lot - it is all lumped together.

The one and only issue with it is that the invoice *must* have the statement "Global Accounting Invoice" on it. And none of the auction houses I have spoken to have the foggiest idea what I am talking about when I ask them if they can do this.

So I am struggling to work out how *anybody* can take advantage of the Global Accounting Scheme if those who are most likely to have any knowledge of it don't know what it is.

I am also struggling to accept that this Scheme is available and we can't use it because of Those Three Words, when it is obviously the best way for us to go. What is the point of HMRC offering a Scheme that isn't usable?

I am hoping to hear back from a few contacts that I have been in touch with today, but so far absolutely nobody except me seems to know about this scheme. HMRC say, "you just need to contact your suppliers and ask them to add this text to their invoices," but if it's not standard practice, they're not going to do it, particularly when they already have the text to make it eligible for the Margin Scheme.

Thanks for your replies - I really appreciate you looking into it for me, and I may well go the way of Slarti's suggestion and make Global Accounting Invoice part of our address!

Thanks again :-)

Ronnie

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Re: The VAT Margin Scheme & Global Accounting

#153493

Postby PinkDalek » July 19th, 2018, 7:41 pm

MrsRonnie wrote:I think Slarti's answer (add it to the bottom of the address) may be the way to go, if we can get away with it like that. I guess it doesn't say where it needs to be in the Notice. ...

The one and only issue with it is that the invoice *must* have the statement "Global Accounting Invoice" on it. And none of the auction houses I have spoken to have the foggiest idea what I am talking about when I ask them if they can do this. ...

I am hoping to hear back from a few contacts that I have been in touch with today, but so far absolutely nobody except me seems to know about this scheme. HMRC say, "you just need to contact your suppliers and ask them to add this text to their invoices," but if it's not standard practice, they're not going to do it, particularly when they already have the text to make it eligible for the Margin Scheme. ...


I missed your reply until now and may be misunderstanding. If the auctioneers with whom you deal only use the standard VAT margin scheme and are unwilling also to use the Global Accounting Scheme for certain lots, then I can’t see how you can encourage them so to do.

Good luck with finding out from your contacts that there is a solution. I’m not at all convinced that putting the wording as part of your address is the solution, in this situation. Might you not be causing potential problems for the Auction Houses (who might be far more likely to have a VAT review, in view of their comparative size)? Surely they cannot be seen to be operating two different schemes on one invoice.

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Re: The VAT Margin Scheme & Global Accounting

#153718

Postby Slarti » July 20th, 2018, 3:13 pm

PinkDalek wrote:I missed your reply until now and may be misunderstanding. If the auctioneers with whom you deal only use the standard VAT margin scheme and are unwilling also to use the Global Accounting Scheme for certain lots, then I can’t see how you can encourage them so to do.

Good luck with finding out from your contacts that there is a solution. I’m not at all convinced that putting the wording as part of your address is the solution, in this situation. Might you not be causing potential problems for the Auction Houses (who might be far more likely to have a VAT review, in view of their comparative size)? Surely they cannot be seen to be operating two different schemes on one invoice.


From reading the HMRC web pages dealing with the schemes, the auction houses don't have to running either scheme, they just have to put the wording on the invoices for people who are. Which sounds like normal VAT stupid complexity.

Another thought for MrsRonnie, set up a document in your word processor to print Global Accounting Invoice at a convenient location on the invoices once you have received them. Perhaps a document per auction house saved as their name to allow the addition at a convenient point.

I suggest this as you can self invoice for goods from a non registered person.

Slarti

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Re: The VAT Margin Scheme & Global Accounting

#153722

Postby PinkDalek » July 20th, 2018, 3:24 pm

Slarti wrote:
PinkDalek wrote:I missed your reply until now and may be misunderstanding. If the auctioneers with whom you deal only use the standard VAT margin scheme and are unwilling also to use the Global Accounting Scheme for certain lots, then I can’t see how you can encourage them so to do.

Good luck with finding out from your contacts that there is a solution. I’m not at all convinced that putting the wording as part of your address is the solution, in this situation. Might you not be causing potential problems for the Auction Houses (who might be far more likely to have a VAT review, in view of their comparative size)? Surely they cannot be seen to be operating two different schemes on one invoice.


From reading the HMRC web pages dealing with the schemes, the auction houses don't have to running either scheme, they just have to put the wording on the invoices for people who are. Which sounds like normal VAT stupid complexity. ...


Thanks, you might be correct but I haven't looked again. Are you able to point to where it says that or provide an extract?

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Re: The VAT Margin Scheme & Global Accounting

#153728

Postby Slarti » July 20th, 2018, 3:29 pm

PinkDalek wrote:
Slarti wrote:From reading the HMRC web pages dealing with the schemes, the auction houses don't have to running either scheme, they just have to put the wording on the invoices for people who are. Which sounds like normal VAT stupid complexity. ...


Thanks, you might be correct but I haven't looked again. Are you able to point to where it says that or provide an extract?


My brief post, 152950, 3 days up thread :D

Slarti

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Re: The VAT Margin Scheme & Global Accounting

#153733

Postby PinkDalek » July 20th, 2018, 3:39 pm

Slarti wrote:
PinkDalek wrote:
Slarti wrote:From reading the HMRC web pages dealing with the schemes, the auction houses don't have to running either scheme, they just have to put the wording on the invoices for people who are. Which sounds like normal VAT stupid complexity. ...


Thanks, you might be correct but I haven't looked again. Are you able to point to where it says that or provide an extract?


My brief post, 152950, 3 days up thread :D

Slarti


Well I saw that previously but it was about not showing VAT separately. ;)

I also quoted from 15.3 where it states that the purchaser must have for goods purchased from another VAT-registered dealer: the statement “Global Accounting Invoice”.

I didn't quote from 15.4. This includes:

15.4 What must I do when selling goods under Global Accounting?


If you have complied with the purchase conditions above, you may use Global Accounting when you sell the goods by:

recording the sale in your usual way, for example, by using a cash register
issuing a sales invoice for sales to other VAT-registered dealers and keeping a copy of the invoice, and
transferring your daily takings for eligible goods and/or totals of copy invoices to your Global Accounting sales record or summary (see paragraph 15.6)

The following rule/requirement/paragraph has the force of law

You must be able to distinguish at the point of sale between sales made under Global Accounting and other types of transaction.


That's where I see the problem when buying from an auctioneer that is VAT registered. Especially one which uses the Margin Scheme rather than Global Accounting.

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Re: The VAT Margin Scheme & Global Accounting

#153767

Postby Slarti » July 20th, 2018, 4:44 pm

PinkDalek wrote:That's where I see the problem when buying from an auctioneer that is VAT registered. Especially one which uses the Margin Scheme rather than Global Accounting.


I would suspect that the auction houses are not selling under either scheme and only have the wording for their customers.

Slarti

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Re: The VAT Margin Scheme & Global Accounting

#153769

Postby PinkDalek » July 20th, 2018, 5:00 pm

Slarti wrote:
PinkDalek wrote:That's where I see the problem when buying from an auctioneer that is VAT registered. Especially one which uses the Margin Scheme rather than Global Accounting.


I would suspect that the auction houses are not selling under either scheme and only have the wording for their customers.

Slarti


This suggests that most auctioneers of fine arts and chattels use the Auctioneers’ Margin Scheme:

http://www.onslows.co.uk/Catalogues/ps2 ... notes.html

Nice posters btw http://www.onslows.co.uk

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Re: The VAT Margin Scheme & Global Accounting

#153777

Postby Slarti » July 20th, 2018, 5:12 pm

PinkDalek wrote:This suggests that most auctioneers of fine arts and chattels use the Auctioneers’ Margin Scheme:

http://www.onslows.co.uk/Catalogues/ps2 ... notes.html

Nice posters btw http://www.onslows.co.uk



I didn't know that there was one of those, not having ever worked with an auction house, I'd just assumed that they'd be doing things under normal VAT as they don't have stock hanging around that much. But I may well be wrong. ;)

Slarti

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Re: The VAT Margin Scheme & Global Accounting

#155539

Postby MrsRonnie » July 27th, 2018, 11:12 am

Sorry to come back so late - I have more-or-less given up on the Global Scheme as I appear to know about it than any of my contacts and I can't see a way round it that doesn't involve dubious means, which I really don't want to do.

I am still looking though, in the meagre hope that I can find a golden nugget of information in the last few days before I have to submit the first VAT return.

I'll let you know if I come across anything - thanks to both for your input, it has made interesting reading :-)

Ronnie


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