VAT margin scheme software for second-hand dealers
The margin scheme is not a setting. It is a decision made per piece at intake, a stock book kept for six years, and an invoice that must not show a VAT figure. Get the field wrong on one watch and the cost is not a rounding error.
Exports to Xero and Sage.
The number that makes the argument
A Daytona bought at £24,800, £737 of workshop, sold at £31,900. The margin is £7,100 and margin scheme VAT at one sixth is £1,183.33. The same sale standard rated is £5,316.67.
The difference is £4,133.34 on one piece, from one dropdown at intake. The input VAT on the workshop, £147.40, is separately reclaimable and does not reduce the margin.
Three regimes, decided per piece
Margin scheme, Notice 718. VAT on the difference between what you paid and what you sold it for. Costs since acquisition must not reduce the taxable margin, which Milleso enforces by allowing exactly one margin base cost line per piece.
Gold reverse charge, Notice 701/21 section 11. Compulsory where the price is at or below metal value, and the margin scheme is barred for precious metals at metal value, investment gold and unmounted stones.
Investment gold exemption. Bars of 995 fineness and above and post-1800 legal tender coins of at least 900. A statutory register, verified identity, six year retention, and notification to HMRC above five thousand pounds. Register failures are expensive: roughly 17.5 per cent of transaction value.
The stock book, and what leaves for the accountant
Notice 718 wants a stock book that ties each purchase to each sale. Milleso keeps that as a consequence of recording the piece rather than as a separate duty, and the VAT report reads from the same records.
Exports go to Xero and Sage. Your accountant signs the return; nothing here is tax advice.
What this uses
The modules behind this page, and the plan that opens each. This table is generated from the rule the software enforces, so it cannot advertise something your plan will not open.
| Module | What it does | From |
|---|---|---|
| Invoices & VAT | Margin scheme, reverse charge, investment gold. | Trade |
| Compliance | AML audit trail, cash thresholds, the investment gold register. | Trade |
| Reports | Ageing, carry cost, margin by brand, where the money is stuck. | Trade |
| Stock | Serialised inventory with all-in cost and VAT position. | Trade |
| Intake | Photograph once - record, screening, AML file and VAT treatment. | Trade |
Questions
- Does the margin scheme software handle repairs and servicing?
- Yes, and it keeps them out of the margin. Service, polish and parts do not reduce the taxable margin under Notice 718, while their input VAT stays separately reclaimable. Milleso holds those as two flags on the cost line rather than as one number.
- Can one system handle the margin scheme and the gold reverse charge together?
- It has to. A watch trader who takes a scrap chain in against a Rolex is dealing with two regimes in one transaction, and they are decided per piece rather than per customer.
- Is this tax advice?
- No. Milleso keeps the records the notices require and prompts you when a threshold is close. Your accountant signs the return.
Answers on this
- What is the VAT margin scheme for second-hand watches?
Under the margin scheme you pay VAT on the difference between what you paid for a watch and what you sold it for - not the full price. Rules, records and traps.
- What is a margin scheme stock book and what must it contain?
The item-by-item record HMRC requires under the VAT margin scheme: twelve mandatory columns, no separate VAT, six years, and what happens without one.
- Do I charge VAT on scrap gold?
Sell scrap gold at metal value to a VAT-registered business and you do not charge VAT - the buyer accounts for it. The rule, the wording, the exceptions.
- Selling investment gold: when do I have to tell HMRC?
Within 28 days of your first exempt supply over £5,000, or £10,000 to one customer in 12 months. Plus the register, the ID rules and a 17.5% penalty.
- Consignment accounting for UK resellers: is consigned stock an asset, who charges VAT, and the margin scheme
Consigned stock is not your asset. Book the consignor's share as a liability and your commission as income; for VAT you are an agent or a margin-scheme principal.
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