Margin scheme ― agents and pawnbrokers

Produced by a Tolley Value Added Tax expert

Value Added Tax

Guidance

This guidance note provides an overview of the margin scheme rules that apply to agents and pawnbrokers. If the business selling the second hand goods via an auction then please see the Margin scheme ― auctioneers guidance note.

This note should be read in conjunction with the Margin schemes - overview and Operating the margin scheme guidance notes.

Agents

Agents act on behalf of other dealers or private individuals in arranging the sale. They usually obtain payment by either retaining a percentage of the selling price or making a separate charge to the seller.

The VAT treatment will depend upon whether the agent is acting as a disclosed or undisclosed agent, with there being a little more complexity for undisclosed agents.

Please see the Supply and consideration ― agents, agency and principals guidance note for more information on the VAT treatment of supplies made by agents more generally.

Disclosed agent

A business acts as a disclosed agent when the customer is aware of the identity of the party actually selling the goods.

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