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. VAT. 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. 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. We’ve updated the notice to reflect the VAT rate of 20%. The creator, or their heir, will have to account for output tax on the full hammer price, so they may ask you to sell the item under the option for the standard margin scheme (see Notice 718), rather than the Auctioneers’ Scheme. An example calculation: a blue widget is sold for $70. Find out how HMRC uses the information we hold about you. If you sell an eligible item, but cannot meet all the record keeping, invoicing and accounting requirements, you cannot use either the Auctioneers’ Scheme or the standard margin scheme. When you sell a horse or pony on behalf of a person who’s not registered for VAT to a person who is registered, you should complete your name, address and lot number on the reverse of part A (white) of the buyer’s form. Buyer’s premium is a tradition that dates all the way back to Roman auctions during the reign of emperor Augustus. You sell the item under the Margin Scheme. From politicians, business tycoons, film stars and who’s who of the world has turned up for the auction. You can find further information about those rules in Notice 700: the VAT Guide. The auction starts and the first piece on sale is a vintage ruby and diamond choker. The sales are liable to VAT in the UK. Although you must always keep stock records, you do not have to maintain a stock book which is strictly in accordance with the requirements set out in Notice 718. Because these 2 supplies happen at the same time, they share a common tax point. It can take 3-8 months to sell a painting in a specialist auction because the larger auction houses often only have two sales a year with long lead  times. For up-to-date information about the capping time limits, see Notice 700/45: how to correct VAT errors and make adjustments or claims. Auctioneers’ Scheme for second-hand goods, works of art, antiques and collectors items. Tax is also included in the selling process including VAT and import duty. You must calculate your purchase price in accordance with the rules in paragraph 3.1. Most art auction  houses charge an unsold charge and insurance before you can get your picture back. If you do decide to use one, there are a number of conditions you must meet. It is important to match your items value and quality to the correct auction house and market. 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. This notice is about the Auctioneers’ Scheme. 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. 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. The Auctioneers’ Scheme is a variation on the standard margin scheme for second-hand goods, works of art, antiques and collectors’ items. The tractor changed hands at today’s Cheffins’ Cambridge Vintage Sale at … The item is valued at import at £500. Date of Sale (to be completed by auctioneer). You may use the Auctioneers’ Scheme to sell the goods on behalf of a pawnbroker if: The 3-part form is a document which can be used to account for VAT on the sale of horses and ponies under the standard margin scheme. 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%. Yes, auction houses set their own rates and they should be shown on their web sites. Notice 700/21: keeping VAT records gives guidance on the general records you must keep if you’re registered for VAT. The standard commission charge to the Vendor is 10% for individual items that realise £500 or more. If you choose to do this, you must ensure that each supply can be clearly distinguished. There are times when auctions are useful particularly if you cannot find a direct buyer for your item. You do not have to apply the same option to all your sales. 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. If the vendor is VAT-registered, they’ll be able to reclaim the VAT on the separate commission invoice if you’ve used the Margin Scheme for the sale. If, for example, the reservation price of the second-highest bidder is $11,365,000 (consisting of a ‘price’ of $10 million and a auction house premium of $1,365,000), that amount does not change with an increase in the rate of the buyers premium. Website by Tinstar, A brief history shows that the art auction started in England in the late 17th Century with a painting auction recorded in 1693, in London. You can recoup the £25 import VAT you had to pay when the item entered the UK from the seller in the USA, but you must not include it in your Auctioneers’ Scheme calculations. The detailed conditions for using the Auctioneers’ Scheme are explained throughout this notice. As a condition of using the concession, you must obtain: You may incorporate the certificate into your existing sales entry in agreement with our Helpline. The winning buyer p… 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. This rate includes marketing costs and insurance cover (except for Wine sales, where marketing and insurance are charged separately). When you calculate your buying and selling prices under the Auctioneers’ Scheme, you must always include: For more information about insurance provided by a third party, see Notice 718. You can use the scheme if the goods are eligible and the seller is one of the following: This is a quick guide to the goods which are eligible to be sold under the margin schemes. It allows you to account for VAT on a margin which is equal to the value of the services you’ve supplied to the seller and the buyer. In other words, it doesn’t become $11,450,000 because of some change in auction house policy. You should read this notice if you’re an auctioneer and you want to know about the Auctioneers’ Scheme. The replacement invoice which you issue to the buyer must: There’s a limit to how long after the due date of the VAT return on which you accounted for the original supply you may issue a replacement invoice. 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. You must not include any other services which you supply to the seller. Pay attention! An example of some fairly typical UK Auction House terms of sale. If you cannot meet all the conditions, you cannot use the scheme. (£30 + £20 = £50.). Commission in an amount equal to six percent (6%) of the total sale price of the Property, payable at closing. You can use the retail export scheme together with the Auctioneers’ Scheme but, if you do, you must account for VAT on the sale until: You can find more information about the retail export scheme in Notice 704: retail exports. The information in this notice used to be contained in Notice 718: Margin Schemes for second-hand goods, works of art, antiques and collectors’ items. At the end of each tax period you’ll need to fill in a VAT return. 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. If we cannot check the margins you’ve declared from your records, VAT will be due on the full selling price of the goods you’ve supplied, even if they were otherwise eligible for the scheme. This amount will form the purchase price for a VAT-registered dealer who’ll be selling the item on using a margin scheme. However, auctioneer commission is only half the picture. Ship it to the auction and wait. Announcements. This is because the capping rules prevent input tax being claimed on invoices over a particular age. Sample -- Notice of Auction Sale. Charges & Commission to Sellers. Paragraph 3.2 explains which charges can be included in your scheme calculations. Sales made from Great Britain to EU member states are exports. So, from that perspective, it would seem, to me at least, that the auctioneer is actually … The most common variation is the English Clock Auction where the auction starts at a low price and begins to rise gradually with each bid placed by the prospective buyers. One auction house charges £30 after three days,  £100 after ten days and then £10 per day. You must not reclaim the import VAT as input tax, or include it in your Auctioneers’ Scheme calculations. If you sell the exported goods under the Margin Scheme, the liability of your services will not follow that of the goods because your services are charged and invoiced outside the scheme. 3.3.1 In any event in which Auction Company is entitled to a Commission pursuant to sub-Section 3.1 above, Auction But you may include all those goods on the same invoice. Check how the new Brexit rules affect you. As of this auction, change in commission rules The sales commission is 20% + VAT on the commission only. There are several variations of the English auction. 40% on all items plus labor, marketing, etc. We will explain auction commission charges and UK auction costs including fees and how much it costs in real terms. The buyer must be able to establish the sales price for those items which were sold under the Auctioneers’ Scheme. 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. Currently they process the payments through their tills and are taking 20% out of the sale before calculating their commission. You sell zero-rated goods (such as antique books) under the Auctioneers’ Scheme. When a painting is unsold it is usually listed on worldwide art sales databases as an unsold picture, which can be unhelpful to a future sale as it may put off  future potential buyers. These services are not separately charged with VAT. Other auction houses You normally* pay a buyer's premium (commission fee) of 22,5% incl. Online commission – for lots sold online, thesaleroom.com charges 4.95% on the hammer price although this fee varies depending on the auction house and type of auction. We will explain auction commission charges and UK auction costs including fees and how much it costs in real terms. It’s important to check with the seller whether the goods are eligible for inclusion in the Auctioneers’ Scheme before you auction them. You may, however, wish to recoup the amount from the seller outside the scheme. The commission is calculated on each item as a fixed percentage based on the eventual hammer price at auction. In the VAT due column of your stock record, you should insert ‘nil’. Sales made under the Auctioneers’ Scheme from Northern Ireland to EU member states are treated in the same way as sales within the UK. You can find details of import procedures and special arrangements for supplies of temporarily admitted goods in Notice 702: imports. But, if you’ve sold an item under the normal VAT rules (that is, you charged VAT on the full selling price), you cannot go back and apply any of the margin schemes to that sale later. You’ll need to include the full title of this notice. Parts of this notice have the force of law under the orders. The sales person works on a commission - he/she gets 14% out of every transaction, which amounts to $9.80. So to confirm have you purchased a property from an auction and that auction has charged a seller fee or has charged you a buyers fee ? There can be regional differences and like any service some are better than others and they all charge fees! So the formula is: commission_amount = sale price * commission_percentage / 100. Catalogues, as today, were published before the sale date. For more information about the special 3 part form for the sale of horses and ponies under the standard margin scheme, see Notice 718. A valuation fee is charged but may be waived if the items are later sold with the same auctioneer. 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. For businesses in Northern Ireland, If the work of art is an acquisition you should: You must calculate your purchase price in accordance with the rules in paragraph 3.1. This is determined by reference to the actual sale of the goods at auction. When you opt to use the Auctioneers’ Scheme for works of art obtained from the creator or their heirs you must not reclaim any VAT charged by the supplier. If VAT is included in the guide price, the rate should be made clear so that consumers are able to calculate the base valuation of the lot: • Guide price £700 + 20% VAT + fees • Guide price £1200 - £1800 (inc. 20% VAT) + fees Where the VAT status of a lot is contested or … So no mention on VAT on the Premium even though as noted by the 2 replies there should be VAT on the Premium. Download (doc, 19.97 KB) × E-mail This Page. They purchased artists of the day including. This means the seller gets the hammer price minus the sales commission. A sale can depend on many factors. 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. I am not vat registered. Yes! 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! These additional rules exist so that there’ll be a clear audit trail of the margin you have achieved on each item you’ve sold. If you sell zero-rated goods, for example antique books, your margin will also be zero-rated. Most carry out valuations for insurance, probate and tax purposes and provide detailed written reports where required. There is a £3.00 lotting fee for each lot entered into the sale. Not all pictures sell at auction. The item you are selling is for export outside the UK or, for businesses in Northern Ireland exported outside the EU. The process of selling Fine Art at auction is the same as the early days. Adding VAT individually or to a a total cost shouldn't change the final figure - Three sums of £10 with VAT of £2 each comes to £36 the same as £30 plus £6 VAT. This means that you should allocate any charges included under the scheme against each separate lot. Using a margin scheme means that you do not have to account for VAT on the hammer price of the goods. While you can change any tradition, however old, … Tax is also included in the selling process including VAT and import duty. It’s important that you keep to these rules so that you can continue using the Auctioneers’ Scheme. A seller’s commission rate is confidential between an auction house and the consignor. If this is the case Robert Perera Fine Art can guide you through the process with their experience and market analysis and recommend an auction house that fits your requirements. Flat rate – Many Auctioneers and Auction Companies charge a commission that is a flat rate. When you sell an item under the scheme, you must issue an invoice to both the buyer and the seller. 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. If a buyer wants to drop out of the auction, he must signal the auctioneer. If you’re not sure whether your records meet the Auctioneers’ Scheme rules, contact our Helpline. 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. When you obtain goods which have had VAT charged on their full value, they’re not normally eligible for the Auctioneers’ Scheme. 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. The margin you calculate under the scheme may not be the same as your profit margin. See section 6 for an example of the certificate. Again, all of this is standard practice within the industry. your name, address and VAT registration number, any charges for services made in connection with the sale of the goods (see paragraph 3.2) - you must not show a separate amount of VAT on any of these charges, the amount due from the buyer (this amount will form your selling price, and the purchase price for a buyer who is VAT-registered and is using the Margin Scheme), refer clearly to the original transaction, state that it’s cancelled and that the buyer should amend their VAT account accordingly, box 1 - include the output tax due on all eligible goods sold in the period covered by the return, box 6 - include the full selling price of all eligible goods sold in the period, less any VAT due on the margin, box 7 - include the full purchase price of eligible goods bought in the period, the value of the pawn is greater than £75, a signed certificate from the vendor giving the vendor’s name and address, confirmation that they’re not registered for VAT nor required to be registered for VAT, you must exercise the option for a period of at least 2 years, after which you must inform the, you must use the scheme in respect of all transactions and goods listed in paragraphs 7.1, not just in respect of certain categories of transactions or certain categories of goods, if, having exercised the option, you decide to sell any goods covered by the option outside the scheme (for example, if you export the goods), you’re not entitled to recover any input tax on those goods until the period in which you account for VAT on their sale, re-exported from the UK or re-exported from Northern Ireland to a place outside the EU, declared to another Customs procedure, for example, account for acquisition tax in box 2 of your VAT return, and, not recover the corresponding acquisition tax in box 4 (input tax), the rate of VAT is 20% and the VAT fraction is 1/6. 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