What could be included in the “Paid” cost under the Margin Scheme?

Dear HMRC colleagues, We bought second-hand watches from overseas and sold them online via eBay. We want to use Margin Scheme, and it states that “VAT margin schemes tax the difference between what you paid for an item and what you sold it for…” My question is what I can include in the what we “paid” for cost? • The cost of the auctioned watches from overseas, • Auction fees, • Shipping fees, • Import duties charged by DHL, • Service fees charged by DHL, Could we include all the above transactions in the cost? Is there any specific VAT guidance regarding this? Thank you very much for your help.

Are you sure that your watches are eligible to be sold under the 2nd hand margin scheme? When the goods enter the UK, they will be subject to import VAT, because the goods you have purchased have been charged with VAT, then they can't be margin scheme supplies. Brexit kind of messed with margin schemes a lot. Check this link first https://www.gov.uk/hmrc-internal-manuals/vat-margin-schemes/vatmarg07000 Also this link https://www.gov.uk/vat-margin-schemes/eligibility "Antiques and collectors’ items - Antiques are goods that are over 100 years old. Collectors’ items are stamps, coins and currency and other pieces of scientific, historical or archaeological interest. Not all items that can be collected are eligible for a margin scheme." So it might be that your watches are classified as antiques, or maybe not, depends on the shipping paperwork the seller sends with the watch and how DHL interprets that paperwork. If DHL are doing the shipping, if DHL know your GB VAT number, they are probably declaring the import VAT to your postponed import VAT Account, so that all you see from DHL is their import duty recharge and their service/shipping fee. With postponed import VAT, the courier (DHL) does not need to pay the import VAT on day of import (they do have to pay the import duty on the day), instead, the courier can assign the import VAT liability directly to your VAT number and you have to access the monthly import statements via your government gateway and account for this VAT on your VAT return. To access postponed VAT statements you first have to register for CDS, use this link here to register for it and then use same link to access your monthly postponed import VAT https://www.gov.uk/guidance/get-your-postponed-import-vat-statement

Good Point Jason. Thank you very much for the information, and we will check some details with DHL. How about the cost consideration? As we purchase watches in the UK as well, what is the general VAT guidance on the cost of goods (we paid for) under the VAT Margin Scheme for second-hand goods? What could be included? auction fees, shipping, packages, insurance, etc? Thank you in advance for your support.

Hi Andy
There is specific guidance for importing goods from overseas and whether you can use the margin scheme for the onward sale.
Please see the guidance below:
Check if you can use a VAT margin scheme if you import from, or export to, countries outside the UK
Thank you.