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whittington2308

Vat free 10oz QB's

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I have been out the silver loop for a while and just bought a couple of these bad boys from stg. When looking at coininvest it has written

'the 10 oz Silver Lion is an essential buy for serious collectors. Plus, as legal UK currency, it’s free from VAT and Capital Gains Tax and a smart buy for investors.'

Err? Did i miss something? Silver is not usually vat free? 

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You didn't miss anything - legal currency is free of VAT but this coin would never be exchanged at face value so not VAT free.
Gets even more intriguing with the earlier releases of the Royal Mint silver £20, £100 so called legal tender coins only to find them described as commorative only after a quick thinking punter bought a large quantity on his credit card and cashed them in at his bank gaining valuable credit card points. After this event the banks were instructed not to exchange them. Having said tha,t if I was working in a bank I would gladly give face value for a 10oz'er. :)

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As legal tender it is VAT free. HMRC is stepping outside their remit by charging VAT. 

This 10oz silver piece is legal  tender in the UK. This has been decided by Parliament.
It is not for HMRC to do anything else but view this as legal tender and any different from a 1p coin, they are a servant of Parliament. It would be illegal to melt the coin down for its silver content b/c you would be destroying legal tender. 

So Silver-to-Go is correct and HMRC is wrong but it would take someone much bigger than us to put the pirates straight. 

Edited by sixgun

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10 minutes ago, whittington2308 said:

Many thanks for the clarification. Looks like the ones to suffer most are uk sellers of new coins? Since we just buy abroad. :(

yes - this is a question i put to Lizzie from Chard. i asked why UK sellers did not use the marginal rate scheme as used by the likes of silver-to-go and goldsilver.be. I didn't get an answer. For sure UK sellers are losing £millions in sales.

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Looks like a typical knee jerk reaction that will need a lot of work to undo. And since its only a few traders benefit and no real tax gained prob wont happen any time soon. And since probably 99pc of trades are paper anyway. Tho i think the vat thing seems to effect amazon silver also? So if it was 'un-vatted' i think the uk traders still wont get that much market share. 🤔 or is there another reason amazon silver is so over priced?

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Another way of looking at the VAT problem on silver kind of goes like this -

You need some work done on your house.

Tradesman (a) is self-employed and highly skilled and quotes you £1,000 with no VAT because his business is below the VAT threshold.

Tradesman (b) works for a larger firm and is equally skilled as (a) but no better, and has to charge you £1,000 plus VAT so you will pay £1,200.

How many of us will give the work to (b) ?

Now with silver - many of us purchase from GS.be and STG and others overseas because of the VAT problem.
That means significant loss of business to Atkinsons, Chard etc.

If you are a VAT registered business you are working for the government collecting taxes.
You charge VAT at the point of sale but you claim back VAT at the point of purchase.
You only pay the VAT difference to HMRC.

I really cannot understand why our UK dealers are not being smarter.
They are loosing significant business to Europe but I really don't care as I am happy to buy from overseas getting much lower prices; but for small purchases I would rather buy in the UK, but tend to wait until I can place a larger order to amortise additional shipping charges.

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I think we're all missing something.  Coininvest makes a claim that isn't strictly true, its not VAT free because its "legal UK currency".  Some say there's 7% VAT on silver, some say thats old rules, some talk about margin schemes, only thing clear is that prices from continental dealers seem cheaper than UK.  However there's something else going on with how VAT is applied.  Take a look at the Queen's Beast Dragon from same supplier, where it has 20% VAT added.  

Its not the only product, Somalia Elephant 2016  has VAT, but the 2018 vintage does not.  If you list all you see many with two prices, the gross (inc VAT) and net price.  Not the only supplier either, see this with at least one other German dealer, http://aurinum.de charges VAT for the Rwanda coins for example.  I wish we understood what was going on, and more the point the UK dealers did so perhaps they could take advantage, I'd rather buy in UK for lower delivery and a bit of flag flying.

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10 hours ago, whittington2308 said:

I have been out the silver loop for a while and just bought a couple of these bad boys from stg. When looking at coininvest it has written

'the 10 oz Silver Lion is an essential buy for serious collectors. Plus, as legal UK currency, it’s free from VAT and Capital Gains Tax and a smart buy for investors.'

Err? Did i miss something? Silver is not usually vat free? 

Cheaper here by 40p, great service by Martin - www.silvertrader.co.uk 

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2 hours ago, Martlet said:

I think we're all missing something.  Coininvest makes a claim that isn't strictly true, its not VAT free because its "legal UK currency".  

Coininvest is correct. 

You will find that the favourable VAT on silver only applies to coins. Bars, ingots and rounds attract the full rate of VAT. All the items are silver, the difference between coins and everything else is coins are legal tender. To be a coin the piece must be or have been legal tender. A 1kg Fiji silver bar does not attract the VAT a 1kg Johnson Matthey bar does b/c it is legally a $10 coin. "flat disc or piece of metal with an official stamp, used as money." The Fiji bar is a piece of metal which is legally money.

8508982a-4a8c-11e6-939d-011e23d7912b.jpg

Edited by sixgun

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5 hours ago, Pete said:

If you are a VAT registered business you are working for the government collecting taxes.
You charge VAT at the point of sale but you claim back VAT at the point of purchase.
You only pay the VAT difference to HMRC.

I'm not a vat registered business so don't know the mechanics of it but it seems to me that what you say is correct only from the business viewpoint. The customer pays vat on the total selling amount, which is the desired, from Government perspective, effect. Don't forget that the original seller, the manufacturer or wholesaler, will have paid vat on the first sale as well. This added to the vat difference you speak of will mean the Government gets the vat on the full retail selling price.

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4 hours ago, Martlet said:

I think we're all missing something.  Coininvest makes a claim that isn't strictly true, its not VAT free because its "legal UK currency".  Some say there's 7% VAT on silver, some say thats old rules, some talk about margin schemes, only thing clear is that prices from continental dealers seem cheaper than UK.  However there's something else going on with how VAT is applied.  Take a look at the Queen's Beast Dragon from same supplier, where it has 20% VAT added.  

Its not the only product, Somalia Elephant 2016  has VAT, but the 2018 vintage does not.  If you list all you see many with two prices, the gross (inc VAT) and net price.  Not the only supplier either, see this with at least one other German dealer, http://aurinum.de charges VAT for the Rwanda coins for example.  I wish we understood what was going on, and more the point the UK dealers did so perhaps they could take advantage, I'd rather buy in UK for lower delivery and a bit of flag flying.

 I can only think there are some programming errors in the websites Some coins are being dealt with on the marginal rate scheme whilst others are having full VAT slapped on them, there were silver Krugerrands with 0% VAT on aurinum.de. So it looks like people are being sloppy and there are errors in the websites. I think quite a few sites are a bit sloppy, so just buy at the best price and to hell with it.

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9 hours ago, Martlet said:

I wish we understood what was going on, and more the point the UK dealers did so perhaps they could take advantage, I'd rather buy in UK for lower delivery and a bit of flag flying.

 

4 hours ago, sixgun said:

Some coins are being dealt with on the marginal rate scheme whilst others are having full VAT slapped on them, there were silver Krugerrands with 0% VAT on aurinum.de.

I did explain it already in the Brexit/VAT thread with the source of the information: under current legislation german dealers pay 7% import duty on silver – if they don't claim back import duty the silver doesn't get VATd. In the next step of tax harmonisation this loophole is likely to be closed.

So unless Queens Beasts get reimported back into the EU, it will be VATd.

 

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6 hours ago, sixgun said:

Coininvest is correct.

I was being literal, being UK currency does not make a silver coin VAT free as you know.  Further being a coin make it eligible for special reduced rate rule, not really totally VAT free.  The only actual 0 rated VAT for silver is in Estonia.

Sloppiness could be an explanation the inconsistencies in VAT application.  In my limited experience, its likely to invite an audit from the local revenue.  The backend system should be simply applying coin = VAT rule A, non-coin = VAT rule B, who'd be mistaking QB Dragons for non-coin?

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6 hours ago, augur said:

 

I did explain it already in the Brexit/VAT thread with the source of the information: under current legislation german dealers pay 7% import duty on silver – if they don't claim back import duty the silver doesn't get VATd. In the next step of tax harmonisation this loophole is likely to be closed.

So unless Queens Beasts get reimported back into the EU, it will be VATd.

I think i left that thread after wandering offtopic.  I also found that same source at the weekend.  What would be interesting is if this was open to the UK dealers too, most VAT regulation is derived from EU so if the loop hole is good for them it should be good for us (and HMRC would have to argue with Brussels about it).  I've also found an Irish dealer, Wickham, that offers VAT free and I wonder if they use the same method.

 

Edited by Martlet

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7 hours ago, augur said:

 

I did explain it already in the Brexit/VAT thread with the source of the information: under current legislation german dealers pay 7% import duty on silver – if they don't claim back import duty the silver doesn't get VATd. In the next step of tax harmonisation this loophole is likely to be closed.

So unless Queens Beasts get reimported back into the EU, it will be VATd.

 

i have not chased all the legal code references but i understand how this works.

Coins are imported into Germany from outside the EU. If a coin were imported from inside the EU the seller would apply the rate of VAT on silver coins applicable inside Germany, this is 19%.

The coins are sold to the German dealer, VAT free from outside the EU. The silver coins pass through German customs and are charged 7% VAT. The German dealer has the option to reclaim the 7% VAT and then charge the going rate of VAT inside Germany which is 19% or not reclaim the 7% VAT which at the same time means there is no additional VAT charged on the coin, however there is VAT at 19% on the profit added onto the selling price of the coin by the dealer. i might argue that because the dealer swallows the import VAT, the dealer effectively becomes the end buyer of the coins and these coins are technically being sold second hand.

Most dealers chose not to reclaim the 7% import VAT as this means the final selling price of the coins is lower and they are more competitive. The marginal rate scheme is where VAT is only applied to the mark up by the dealer.

i have noticed that German coins bought in German are quite expensive. This explains this as these coins are likely not imported from outside the EU. i am aware that at least some of the low VAT dealers import coins from the US. That they buy non-US [and US] coins from the US. So for example Royal Mint coins are bought from the US [outside the EU] when it from a shipping cost point of view would probably be cheaper to import them directly from the Royal Mint in the UK. This is b/c these coins would arrive in their offices with 19% VAT instead of the German customs 7% VAT.

UK dealers could do the same thing but there would be no advantage to it. If coins were imported from the US, HMRC i expect would charge 20% VAT as they went through customs. This is why it is not done b/c they do not have the advantage that customs charge a lower rate on coins imported from outside the EU.

However we then get to the HMRC rule of 5% VAT on silver coins [collectors' pieces] of numismatic interest. i see silvertrade.uk made strenuous attempts to import coins at 5%. i do not know how this finally worked out. He seems to be making progress but then did not post anymore on the forum he was posting information on. He is a very small trader.  It would be interesting to invite him to post his experiences on the forum. If anyone knows him would they make that invitation? 

Perhaps if the bigger dealers like Atkinsons, Chard and BullionbyPost banned together there might be real progress. Perhaps they have done this already but failed to make progress. This is why, on another thread, i asked questions of Lizzie from Chards about VAT and marginal rate scheme.This would be the way forward to getting the price of silver coins down in the UK if it worked it would actually make silver coins the cheapest in Europe outside Estonia. 

ps - i sent Martin from silvertrader.uk a message through his website asking him if is interested to tell forum members about his experience with HMRC and the 5% VAT rate on silver collectors' pieces of numismatic interest.

Edited by sixgun

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Martin from silvertrader.uk very promptly replied to my email. It is clear from his posts he spent a lot of time and effort on this issue and was thwarted several times along the way. He says he is making preparations should Brexit occur. i don't know any more than that.

Edited by sixgun

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On 20/09/2017 at 16:17, sixgun said:

yes - this is a question i put to Lizzie from Chard. i asked why UK sellers did not use the marginal rate scheme as used by the likes of silver-to-go and goldsilver.be. I didn't get an answer. For sure UK sellers are losing £millions in sales.

I thought I had answered this. Whilst we are restricted by HMRC we have to abide by their rules. Large fines for those that don't.

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2 hours ago, ChardLizzie said:

I thought I had answered this. Whilst we are restricted by HMRC we have to abide by their rules. Large fines for those that don't.

i have done further research into this since that post. From the information i have been given, silver coins are imported into Germany, usually from the US and are taxed at 7% by German customs. This VAT is not reclaimed by the dealer. The coins are then sold as second hand under the marginal rate scheme where there is only VAT on profits. In one of the shipping trackers for silver i bought from goldsilver.be who are in Belgium, the silver coins were warehoused in Germany, so i presume goldsilver.be have an office in Germany and imported it from say the USA into Germany and then shipped them to the UK.

My original question was that German dealers use the marginal rate scheme  [with new coins] so why don't UK dealers do this? Now i can see why. UK customs will customarily slap 20% VAT on imported silver coins, unlike German customs who charge 7% VAT. There would be no advantage to using the exploits used by German dealers b/c of the difference in VAT rates. Now there is the issue of 5% customs VAT on silver collectors' pieces of numismatic interest but that is another story which has been covered more than once on the forum.

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34 minutes ago, sixgun said:

My original question was that German dealers use the marginal rate scheme  [with new coins] so why don't UK dealers do this? Now i can see why. UK customs will customarily slap 20% VAT on imported silver coins, unlike German customs who charge 7% VAT. There would be no advantage to using the exploits used by German dealers b/c of the difference in VAT rates. Now there is the issue of 5% customs VAT on silver collectors' pieces of numismatic interest but that is another story which has been covered more than once on the forum.

Surprised you've let off the trail at the end there... surely the whole point is the application of the 5% VAT rate rather than 20%?  Aren't the rules behind this the same between UK and Germany not the same under EU law, if not why not (harmonisation and all that)?

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Funny how the hmrc will hound people who don't make that much money for ever more if they think they have been short changed and levy fines upon them but if you're a billionaire they seem much less willing to chase you and will even come to agreements where you reportedly pay less than you should owe.  By god, if they decided I owed them even a few hundred quid I'd never hear the end of it

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