VAT on 2nd hand silver

[mr-dead]

Just read the following on Chards -

 

"VAT - Second-hand Scheme
Also because all of these sets are second hand you do not pay VAT at 20% on the full amount - making them a good way to invest in silver, palladium and platinum*. Non-reclaimable VAT on our profit margin is included in the premiums quoted."

 

http://24carat.co.uk/frame.php?url=2012australiansilverdollarsyearofthedragonseries2.php&utm_source=mailshot&utm_medium=email&utm_content=chd-mail&utm_campaign=1kilodragon

 

 

However, Atkinsons for example do charge the full 20% VAT on used silver bullion -

 

http://atkinsonsbullion.com/silver-bar-bundle-9-oz

 

So are Atkinsons charging the full amount and pocketing the difference and only actually paying VAT on the profit margin?

[silversword]

HMRC specifically exempts precious metals from the margin VAT scheme, but collectors items and second hand goods are ok. So where does that leave a second hand collectors item that's also a precious metal?

Because Chards have been more of a coin dealer/seller of collectibles and are selling sets, they perhaps err towards one view. Atkinsons as a bullion dealer may be obliged to interpret the rules more literally.

[Murph]

What about ebay's global shipping scheme, they charge you VAT when you buy gold from a seller using global shipping even if the item is exempt. Ebay don't seem to be willing to answer why either as they have ignored or disconnected me when I have asked about this.

[Pete]

Unless you are VAT registered and claiming back VAT, you are wasting your energy here.

Of course secondhand silver can be sold at zero VAT but which commercial seller in the UK will sell for 20% less ?

A new silver Britannia will show VAT at 20% on a VAT invoice and a used coin 0% VAT but guess what - the price you pay will be the same. So yes, the seller is profiteering but that's business ! When it comes to selling you can discount your treasure by 20% selling to a dealer who will tell you that VAT was factored into the price and needs to be removed.

[silversword]

Er no, that would be fraud. Anyone shifting a moderate amount of bullion whilst employing this sort of subterfuge is going to have a heck of a lot of book-cooking to do.

If you are aware of any seller fiddling VAT then they can be reported to HMRC

[craig12]

i asked paul atkinson today why they charge vat on secondhand silver when the first buyer had already paid the vat  and why was the goverment able to collect vat over and over again on the same item 

 

he replied   we asked the vat man and he said    we were to charge it unless it was classed as a collectible coin   

[Hookythestacker]

i asked paul atkinson today why they charge vat on secondhand silver when the first buyer had already paid the vat  and why was the goverment able to collect vat over and over again on the same item 

 

he replied   we asked the vat man and he said    we were to charge it unless it was classed as a collectible coin

Whose definition of collectible are we to use? Anything is collectible to some extent, sounds like a solicitor feeding frenzy in the making should anybody with deep enough pockets care to challenge the taxman over the definition of collectible. I seem to remember the taxman taking the definition of cake and biscuit to the courts so they would probably be up for a good scrap over collectible.

[Pete]

I reckon for 99.99% of forum stackers it does not matter whether VAT is nil or 100% as we are not businesses registered for VAT.

The only figure that matters is how much we pay the seller.

Secondhand silver should be zero rated but as stated earlier, the dealer will just bump up the margin to the same price as if VAT was added. You will not get it for 20% less because it is used.

[Dune69]

i asked paul atkinson today why they charge vat on secondhand silver when the first buyer had already paid the vat  and why was the goverment able to collect vat over and over again on the same item 

 

he replied   we asked the vat man and he said    we were to charge it unless it was classed as a collectible coin   

 

Yep its always confused the heck out of me

 

Atkinsons have a pre owned 2009 Proof 4 Coin Britannia Set with VAT

Yet i bought 60 britannia's VAT free under the margin scheme from them last year

[ChrisSilver]

Even though the second hand margin scheme exists. It may just be easier for some dealers to just charge VAT as usual, especially if the majority of their sales are normally bullion. Easier for accounting.

[morezone]

Didn't Chards have a lengthy battle with HMRC many years ago about using the margin scheme. I could be mistaken because it was many years ago where I "think" I read about it somewhere.

[sixgun]

i was just looking at some silver bars on Atkinson's pre-owned. You know silver bars the previous owner paid VAT on.

i got a bit excited b/c the price was quite low and then i check and VAT is then added on to the bars the pirates have already collected they extortion money on.

i note on the pre-owned section there are some Lunar Monkey .silver coins for sale VAT free.

in another thread i post where the Royal Mint are calling all their legal tender non circulating coins are commemorative, even the run of the mill every year £2 silver Britannias. So they are collector coins.  So no VAT on second hand silver coins on that basis.

[sovereignsteve]

On 16/02/2015 at 14:06, morezone said:

Didn't Chards have a lengthy battle with HMRC many years ago about using the margin scheme. I could be mistaken because it was many years ago where I "think" I read about it somewhere.

I'm not sure if it was simply this or how long ago the original issue was but the last I remember, they were still trying to get a tax refund. This must have been a couple of years ago.

If it was simply the margin scheme and they did get a substantial vat refund, would they then refund all the customers affected?

[Jimmock]

Thank you for your email.

 

There is a long version of the reply to your questions but the short answer is this,

 

The Margin Scheme run by HMRC allows us to re sell pre owned silver coins without the vat as they are “Collectable” coins. Any other silver, bars, rounds etc MUST be charged with VAT.

 

That is the rule if we buy the coins from the public. If we buy the coins from a client who has bought them through their business then we pay them the VAT and we must follow the line of VAT and charge VAT on the coins even though they are pre owned.

 

Hope that helps?

 

Kind Regards

Paul

 

This was reply I received from atkinsons when I questioned them about it.

 

[sixgun]

17 minutes ago, sovereignsteve said:

I'm not sure if it was simply this or how long ago the original issue was but the last I remember, they were still trying to get a tax refund. This must have been a couple of years ago.

If it was simply the margin scheme and they did get a substantial vat refund, would they then refund all the customers affected?

 

 

 

Well even for the most honest guy tracking down all your previous silver coin customers would be a big job especially for an outfit the size of Chards. So they would not and could not practically refund all the customers.

i don't know what the split is with gold and silver coins for the UK dealers. i have never bought a silver coin from a UK dealer. i can equally imagine that a good deal of others think alike and so the big UK dealers' business is heavily skewed towards gold. 

i would love to buy silver coins from UK dealers. i have bought new and pre-owned gold from Atkinsons plenty of times. The prices are keen and there is free postage or it has been easy to collect myself.

The Germans are cleaning up on silver coins in Europe with their application of VAT. This perhaps explains why there are so many dealers and choice. When you listen to Americans on youtube they are all talking about their local coin store. i strongly suspect if VAT were lifted on silver investment and collector items the pirates would actually get more currency than they do now.

[sovereignsteve]

1 minute ago, sixgun said:

Well even for the most honest guy tracking down all your previous silver coin customers would be a big job especially for an outfit the size of Chards. So they would not and could not practically refund all the customers.

I know, I was being mischievous.

If my aging memory is correct, I think the amount they were claiming was in the hundreds of thousands so it would be a nice profit bump up if they got it.

[morezone]

51 minutes ago, sixgun said:

i was just looking at some silver bars on Atkinson's pre-owned. You know silver bars the previous owner paid VAT on.

i got a bit excited b/c the price was quite low and then i check and VAT is then added on to the bars the pirates have already collected they extortion money on.

i note on the pre-owned section there are some Lunar Monkey .silver coins for sale VAT free.

in another thread i post where the Royal Mint are calling all their legal tender non circulating coins are commemorative, even the run of the mill every year £2 silver Britannias. So they are collector coins.  So no VAT on second hand silver coins on that basis.

Some one asked Atkinsons as to why some secondary silver is VAT free while some still has VAT.  VAT free pre-owned silver is purchased from private individuals.  Pre-owned silver with VAT is purchased from businesses/organisations etc.

[LawrenceChard]

The HMRC website is not completely clear, as usual. 

We have spent many happy(!) hours going round in circles on it seeking clarification for a number of points.

If you were to try to ask HMRC, I suspect you would wait a long time for an answer, and even then it would be ambiguous and unequivocal, probably referring you back to various parts of its website, rather than giving you a clear concise accurate answer. This is probably for a few reasons: (1) if an HMRC official tells you there is no (or less) tax payable and it turns out he is wrong, he is probably in danger of losing his job. (2) HMRC's job is to extract the maximum amount of money from anybody and everybody. and your job to try to get it back if they are wrong (I am being slightly cynical).

We (Chards) did not have any dispute with HMRC about second-hand scheme.

Before VAT was removed on gold, we did operate a margin scheme for gold coins where technically we sold gold coins on commission for the seller, and charged VAT only on our commission. We devised the scheme. proposed it, and it was accepted by HMRC.

We did however have a dispute with HMRC a few years ago, when an official in their CITEX section ordered us to pay £114,000+ import VAT on exempt goods, which she stated could be reclaimed on our next VAT return "subject to normal rules". We naively believed her, and paid the amount immediately (not even delaying it the 28 days allowed). When we reclaimed it, we were told we could not reclaim it as input VAT could not be reclaimed on exempt goods. The CITEX officer had mislead (lied to) us, and it took us more than a year, and thousands of pounds in specialist VAT accountant fees before we got out money back.

You would be correct if you assumed that this incident has worsened my opinion of HMRC, which would now include some very colourful language, probably best not expressed in full here.

[sixgun]

i notice Atkinsons are putting all their second hand silver coins through VAT free. 

As they then work out at a good price they sell very quickly. I noticed that this was not always the case but Paul Atkinson turned up on another thread about VAT and perhaps coincidentally since then all the silver COINS [not medallions or bars] have been VAT free. I recently bought a 1kg Perth Lunar Snake silver coin. i am very happy with this but only bought it b/c it was VAT free and at a very good price.

i notice on Hatton Garden Metals that gold shifts quickly but i see silver on which they charge VAT hangs around. Likely HGM will say we sell everything as bullion, not "collectors' pieces of numismatic interest." So they charge VAT. In reality VAT has been paid and the pirates are getting twice the plunder. Don't buy the stuff. Don't pay the pirates.   

It is very simple really. If the price is too high don't buy. Dealers who could sell VAT free will realise this and make efforts to sell VAT free. If customers are prepared to pay a price with VAT then VAT is likely to be charged. If customers won't the dealer is left with this stock on his books and this is dead money and costs him. 

 

[Clens92]

Apologies if I'm being really thick, but the VAT Margin Scheme (selling secondhand goods and only paying 1/6th VAT on your profit) specifically excludes precious metals.

Where are you getting the information that secondhand silver should be VAT-free, please?

 

Not having a pop - genuinely hoping to find a workaround for a future problem I'm going to have!

[sixgun]

What is being sold?

Bullion silver - silver sold by weight, as metal and only as metal? 

A collectors' piece of numismatic interest which happens to be made out of silver?

7 minutes ago, Clens92 said:

genuinely hoping to find a workaround for a future problem I'm going to have!

 

Not wanting to pry but are you thinking you might have to charge VAT? 

Are you running this as a business with a turnover of over £83k?

We are private collectors of collectors' pieces of numismatic interest. No pirates allowed here. We are free men and women, not slaves. 

[Clens92]

43 minutes ago, sixgun said:

What is being sold?

Bullion silver - silver sold by weight, as metal and only as metal? 

A collectors' piece of numismatic interest which happens to be made out of silver?

Not wanting to pry but are you thinking you might have to charge VAT? 

Are you running this as a business with a turnover of over £83k?

We are private collectors of collectors' pieces of numismatic interest. No pirates allowed here. We are free men and women, not slaves. 

You can call it whatever you like, but HMRC will simply laugh and fine you.  It is a precious metal; it is exempted from the VAT Margin Scheme and VAT is levied at 20% of the final sale price.  That's why I wonder how some companies seem to skirt this.

 

1. Overview

VAT margin schemes tax the difference between what you paid for an item and what you sold it for, rather than the full selling price. You pay VAT at 16.67% (one-sixth) on the difference.

You can choose to use a margin scheme when you sell:

• second-hand goods
• works of art
• antiques
• collectors’ items

You can’t use a margin scheme for:

• any item you bought for which you were charged VAT
• precious metals
• investment gold
• precious stones

 

Source: https://www.gov.uk/vat-margin-schemes/overview

 

 

This is why HGM charge VAT on silver.  There is a separate VAT Notice for investment gold.

[sovereignsteve]

That's all very well, but they need to provide definitions for all those categories quoted, as there is potentially lots of crossover between the two lists. For example, there are numerous examples of "collectors' items" and "antiques" that are made of precious metals and/or include precious stones.

[sixgun]

20 minutes ago, Clens92 said:

You can call it whatever you like, but HMRC will simply laugh and fine you.  It is a precious metal; it is exempted from the VAT Margin Scheme and VAT is levied at 20% of the final sale price.  That's why I wonder how some companies seem to skirt this.

 

1. Overview

VAT margin schemes tax the difference between what you paid for an item and what you sold it for, rather than the full selling price. You pay VAT at 16.67% (one-sixth) on the difference.

You can choose to use a margin scheme when you sell:

• second-hand goods
• works of art
• antiques
• collectors’ items

You can’t use a margin scheme for:

• any item you bought for which you were charged VAT
• precious metals
• investment gold
• precious stones

 

Source: https://www.gov.uk/vat-margin-schemes/overview

 

 

 

1

I am not laughing i am reading the rules. Do not make assumptions, just read the rules. It is there in black and white.

What is the primary category for the item sold? Is it a lump of metal or a collectors' item? A bar of silver is a lump of metal. It is sold as a lump of metal. A 1kg Perth Mint Lunar II series snake in a capsule is a collectors' item. If it turned out the coin was in fact not a 1kg Perth Mint Lunar II series snake but a solid silver 999 purity FAKE would that affect the price? You bet it would. Why? Because it is a collectors' item. 

As correctly pointed out by Sovereign Steve, many antiques and collectors' items are made of silver. These may be sold using the margin scheme. There is nothing different about coins or medals. Well i would say there is a lot different about coins b/c they are legal tender. The very idea of charging VAT on legal tender is insane but forgetting that for a moment we are dealing with collectors' items.

You can choose to pay if you want, that is up to you. HMRC will always take your money.

[Paul]