Auctioneers' VAT margin scheme and VAT Registration

Hello, I have a small limited company that I run in my spare time that is not registered for VAT as turnover is below the threshold. I wish it was higher but that's another story. I am thinking about running some occasional specialist auctions through the company that would, if I was VAT registered, fall within the auctioneers scheme (VAT notice 718/2) i.e. VAT chargeable on the margin/services rather than the hammer price. I will only accept qualifying sellers. The auctioned goods sale costs are likely to be high enough to put me above registration threshold but if I only consider the service costs I would still be below the registration threshold. Can you confirm that if I account for auctions *as if* I were using the VAT Margin Scheme I only need to consider margin cost when considering whether VAT registration is compulsory rather than hammer price? Many thanks Steve

Hi,
If you are using the auctioneers margin scheme then as per the guidance below:
You should:
Work out the purchase price and selling price
Take away the purchase price from the selling price to work out the gross margin
Multiply the gross margin by 1/6
The VAT due is the difference between what you paid for the goods and what you sold them for, not the overall profit you have made on them.
As you are an agent acting in your own name for these transactions then your taxable supplies will be the selling price of the goods.
Therefore when considering your taxable turnover you would need to use your selling price and not the margin.
Please see the guidance below:
Using the auctioneers' VAT margin scheme How the scheme works
VAT guide (VAT Notice 700) 22. Supplies made by or through agents
Thank you