For example, if your winning bid is 100 EUR, the commission fee will be 22,50 EUR and the hammer fee will be 8 EUR for a total of 130,50 EUR. An example of typical Auction Fees in London Sliding Scale – Some Auctioneers And Auction Companies charge a commission that adjusts based upon the price of items. If the goods are finally imported, or declared for entry to Customs Warehousing or Inward Processing Relief after the auction, you must charge VAT on the buyer’s premium at the standard rate. This notice assumes that you have a working knowledge of basic VAT principles, as outlined in Notice 700: the VAT Guide. If so if you reach out directly to the auction house and your solicitor should be able to assist with what is in your purchase contract and what fees are payable. See section 6 for an example of the certificate. Flat rate – Many Auctioneers and Auction Companies charge a commission that is a flat rate. You may use the Auctioneers’ Scheme to account for sales of such items by auction, but you must charge VAT on the buyer’s premium at the appropriate rate. We base our commission rates according to your sale and what you have to offer. VAT. The rules about declarations on Auctioneers’ Scheme invoices have changed, see section 4 for details. If you use the Auctioneers’ Scheme, there are some additional record keeping rules which apply to your stock record and invoices – paragraphs 4.2 to 4.8 give details. Your purchase price under the standard margin scheme option will be the hammer price only. There is an auction for Tiffany Vintage Jewelry at a famous auction house in London. Example of vendor’s certificate for goods sold on behalf of non-taxable persons, 7. your name, address and VAT registration number, any charges for services made in connection with the sale of the goods (see paragraph 3.2) - you must not show a separate amount of VAT on any of these charges, the amount due from the buyer (this amount will form your selling price, and the purchase price for a buyer who is VAT-registered and is using the Margin Scheme), refer clearly to the original transaction, state that it’s cancelled and that the buyer should amend their VAT account accordingly, box 1 - include the output tax due on all eligible goods sold in the period covered by the return, box 6 - include the full selling price of all eligible goods sold in the period, less any VAT due on the margin, box 7 - include the full purchase price of eligible goods bought in the period, the value of the pawn is greater than £75, a signed certificate from the vendor giving the vendor’s name and address, confirmation that they’re not registered for VAT nor required to be registered for VAT, you must exercise the option for a period of at least 2 years, after which you must inform the, you must use the scheme in respect of all transactions and goods listed in paragraphs 7.1, not just in respect of certain categories of transactions or certain categories of goods, if, having exercised the option, you decide to sell any goods covered by the option outside the scheme (for example, if you export the goods), you’re not entitled to recover any input tax on those goods until the period in which you account for VAT on their sale, re-exported from the UK or re-exported from Northern Ireland to a place outside the EU, declared to another Customs procedure, for example, account for acquisition tax in box 2 of your VAT return, and, not recover the corresponding acquisition tax in box 4 (input tax), the rate of VAT is 20% and the VAT fraction is 1/6. So no mention on VAT on the Premium even though as noted by the 2 replies there should be VAT on the Premium. The detailed conditions for using the Auctioneers’ Scheme are explained throughout this notice. When you opt to use the Auctioneers’ Scheme for imported works of art, antiques or collectors’ items on behalf of an overseas seller, the option will apply to imports at a reduced rate of 5%. As explained in paragraph 2.2, you calculate your margin by taking into account charges for the services you make to the seller and the buyer. If you sell the exported goods under the Margin Scheme, the liability of your services will not follow that of the goods because your services are charged and invoiced outside the scheme. Online commission – for lots sold online, thesaleroom.com charges 4.95% on the hammer price although this fee varies depending on the auction house and type of auction. So the formula is: commission_amount = sale price * commission_percentage / 100. Using a margin scheme means that you do not have to account for VAT on the hammer price of the goods. It tells you when you may use the Auctioneers’ Scheme to account for VAT on the supplies you make. We’ve included this section to help you understand the effect that different scenarios will have on the total VAT you would owe us for the same transaction. You need to find a local or London auction house to value your item. This means the seller gets the hammer price minus the sales commission. A valuation fee is charged but may be waived if the items are later sold with the same auctioneer. You sell zero-rated goods (such as antique books) under the Auctioneers’ Scheme. Website by Tinstar, A brief history shows that the art auction started in England in the late 17th Century with a painting auction recorded in 1693, in London. So if a property sells for £200,000 the commission payable to the auctioneer would be £4,000 + VAT. Craft items and items produced in a technical or industrial context may not be eligible to be sold under the margin schemes. If you’re in any doubt, check the list at the end of Notice 718. Vendor’s Certificate for goods grown, made or produced and sold at auction on behalf of non-taxable persons. If the 6 year rule causes you serious storage problems or undue expense, then you should consult our VAT Helpline. But if you’re an auctioneer, and you act in your own name, you may opt to use the Auctioneers’ Scheme for works of art, antiques and collectors’ items which you’ve imported yourself (as principal on behalf of a third party) for onward sale in your own name, and works of art you have obtained (that is, which were supplied in the UK or acquired in Northern Ireland from an EU member state) from creators or their heirs, for onward sale in your own name, whether or not VAT was charged on their purchase or acquisition. To help us improve GOV.UK, we’d like to know more about your visit today. At the end of each tax period you’ll need to fill in a VAT return. This notice is about the Auctioneers’ Scheme, which is a variation on the VAT Margin Scheme for second-hand goods, antiques, works of art and collectors’ items. To calculate the VAT on the sale, you multiply the margin by 1/6 (the VAT fraction). As the price goes up their commission goes down. If you choose to do this, you must ensure that each supply can be clearly distinguished. The replacement invoice which you issue to the buyer must: There’s a limit to how long after the due date of the VAT return on which you accounted for the original supply you may issue a replacement invoice. This clean example of a 1996 Ford New Holland 7740 with 8,500 hours on the clock sold for €18,500 plus commission (no VAT). Look on the back of fine art greetings cards and see who has provided the image. We use cookies to collect information about how you use GOV.UK. They purchased artists of the day including. For businesses in Northern Ireland, If the work of art is an acquisition you should: You must calculate your purchase price in accordance with the rules in paragraph 3.1. This notice is about the Auctioneers’ Scheme. Plus an entry fee, although some auctioneers don’t charge for this. To calculate your margin, you subtract the purchase price from the selling price. For example, if Bob is the winning bidder on a table and chair set that he bid $100 on, and the buyer’s premium is 10% for that particular auction, Bob will actually pay $110 for the item plus any other fees charged by the auction house such as sales tax. But, if you’ve sold an item under the normal VAT rules (that is, you charged VAT on the full selling price), you cannot go back and apply any of the margin schemes to that sale later. If the purchase invoice shows a separate VAT amount, the item is not eligible to be sold under the scheme. We will explain auction commission charges and UK auction costs including fees and how much it costs in real terms. Yes! Find out how HMRC uses the information we hold about you. You must not include any other services which you supply to the seller. You may, however, wish to recoup the amount from the seller outside the scheme. The sales person works on a commission - he/she gets 14% out of every transaction, which amounts to $9.80. Those looking to hire an auctioneer often compare seller commissions to help them determine which auctioneer to select. There are special rules about how to calculate your buying price, your selling price and your margin under the scheme. You must not use the scheme to account for sales of: There is more information about these categories of goods at the end of Notice 718. You can recoup the £25 import VAT you had to pay when the item entered the UK from the seller in the USA, but you must not include it in your Auctioneers’ Scheme calculations. A marketing fee is charged at £10 (plus VAT) per lot. the commission is a VAT-inclusive rate of 12%, that is, 10% plus VAT, buyer’s premium is a VAT-inclusive rate of 18%, that is, 15% plus VAT. If you’ve sold goods under the Auctioneers’ Scheme, and the buyer subsequently decides that they wish to treat the transaction outside the scheme, preferring to pay VAT separately on the hammer price and other charges, you may re-invoice for the transaction under the normal VAT rules. The retail export scheme allows certain overseas visitors to get a VAT refund on goods they buy and export from Northern Ireland in their personal luggage. You do not have to apply the same option to all your sales. We have moved the information which is relevant to auctioneers who opt to use the Auctioneers’ Scheme into this separate, shorter notice. Other wider factors can include the economy, stock market, current bad news, sporting events and even the weather including heatwaves or snow! Most carry out valuations for insurance, probate and tax purposes and provide detailed written reports where required. Charges & Commission to Sellers. We use this information to make the website work as well as possible and improve government services. If you have any feedback about this notice email: customerexperience.indirecttaxes@hmrc.gsi.gov.uk. Below is an outline of the potential pitfalls of selling in auctions. The 3-part forms come in numbered sets, with a VAT summary sheet at the back. This is because the capping rules prevent input tax being claimed on invoices over a particular age. The commission is calculated on each item as a fixed percentage based on the eventual hammer price at auction. In other words, if you’re selling several items on behalf of one seller, you must not put the total commission charged to that seller on the invoice for one of the items. Our seller’s commission charge is 12.5% (plus VAT) on items with a hammer price of over £3,001, or 15% (plus VAT) for items with a hammer price of £3,000 or under. Additional charges at a painting auction: They may also have a discretionary reserve which means that you give them permission to sell goods typically 10%-20% below the reserve price. We’ve updated the notice to reflect the VAT rate of 20%. Adding VAT individually or to a a total cost shouldn't change the final figure - Three sums of £10 with VAT of £2 each comes to £36 the same as £30 plus £6 VAT. If, after reading this notice, you need any further help or advice, contact our VAT Helpline. It can take 3-8 months to sell a painting in a specialist auction because the larger auction houses often only have two sales a year with long lead  times. 10% for items selling for $10,000 or more In most cases, goods which are second-hand in the ordinary usage of the term will be eligible for the margin schemes. The auction ends when only one bidder is remaining, and the auctioneer announces the winner. Many of our clients are looking to avoid the high cost of selling items at auction and so find selling to our specialist gallery a more favourable option. I am not vat registered. If you’ve made any charges which are not included in your scheme calculations, you must: If you’re acting in your own name, the goods you sell are deemed, for VAT purposes, to be both a supply to you and a supply from you. It is important to match your items value and quality to the correct auction house and market. So, from that perspective, it would seem, to me at least, that the auctioneer is actually … Storage fees if items not collected on time. We’ll send you a link to a feedback form. The process of selling Fine Art at auction is the same as the early days. One is now charging £10 for a condition report. The most common variation is the English Clock Auction where the auction starts at a low price and begins to rise gradually with each bid placed by the prospective buyers. You’ll have to pay VAT on the hammer price as well as on your services to the vendor and the purchaser under the normal VAT rules for undisclosed agents. You pay import VAT at 5% on this value (£25). You must not reclaim the import VAT as input tax, or include it in your Auctioneers’ Scheme calculations. These additional rules exist so that there’ll be a clear audit trail of the margin you have achieved on each item you’ve sold. 40% on all items plus labor, marketing, etc. You can re-invoice for the transaction under the normal VAT rules provided that you’re able to comply with all the relevant VAT regulations for the substitute transaction and, at the time of the amendment, both you and the buyer hold all the original records relating to the transaction. Because these 2 supplies happen at the same time, they share a common tax point. Subject . Ship it to the auction and wait. VAT and a hammer fee of 8 GBP incl. Sales made under the Auctioneers’ Scheme from Northern Ireland to EU member states are treated in the same way as sales within the UK. So to confirm have you purchased a property from an auction and that auction has charged a seller fee or has charged you a buyers fee ? Fees can be substantial for both buyers and sellers. As a condition of using the concession, you must obtain: You may incorporate the certificate into your existing sales entry in agreement with our Helpline. Although you must always keep stock records, you do not have to maintain a stock book which is strictly in accordance with the requirements set out in Notice 718. The legal definition of second-hand goods is goods which are suitable for further use as they are, or after repair. See Notice 703: exports and removals of goods from the UK for more information. For more information about the special 3 part form for the sale of horses and ponies under the standard margin scheme, see Notice 718. You can use the scheme if the goods are eligible and the seller is one of the following: This is a quick guide to the goods which are eligible to be sold under the margin schemes. There are detailed examples of calculations in section 8. Many of the leading British auction houses sell licences to the photograph they uses for their catalogues, making more revenue from your painting, long after you sold it!You have normally agreed to this in the small print. Again, all of this is standard practice within the industry. 19 St. Thomas Street, Lymington, Hampshire, SO41 9NB, United Kingdom Phone: +44 (0)1590 678230 | E-mail : info@british-arts.com Company Registration Number: 04670360 (England) | VAT No: 675745490 Privacy Policy and Cookies | Terms & Conditions, © 2020 All text, images and code on this site are copyright of Robert Perera Fine Art Ltd., Artist, Artist’s Estate or relevant copyright owner. You can only use the scheme to account for sales of air guns if you are registered under the Firearms Act 1968. You can find further information about those rules in Notice 700: the VAT Guide. The VAT (Special Provisions) Order 1995 (as amended) covers all goods other than cars. If you’re not sure whether your records meet the Auctioneers’ Scheme rules, contact our Helpline. If you do decide to use one, there are a number of conditions you must meet. If you sell an eligible item, but cannot meet all the record keeping, invoicing and accounting requirements, you cannot use either the Auctioneers’ Scheme or the standard margin scheme. For full details, including how to claim VAT refunds, please see the VAT & Tax Guide in this Auction Buyer's Guide and on our website ♠ Artist's Resale Royalty (ARR) The laws in certain countries entitle qualifying artists or their estates to a royalty when the artist's works are re-sold for a hammer price of EUR 1,000 or more. If you account for the sale under the standard margin scheme, you must show VAT separately on any invoice or statement you issue for charges for your services. This is determined by reference to the actual sale of the goods at auction. (£30 + £20 = £50.). Example of an English Auction. You do not charge buyer’s premium or any other charges to the buyer. The buyer must be able to establish the sales price for those items which were sold under the Auctioneers’ Scheme. All of us are familiar with the movie version of auctions in which precious works of art are bid upon in elegant rooms, bids of millions of dollars made with the slight raise of a hand. In other words, it doesn’t become $11,450,000 because of some change in auction house policy. You must issue the seller with an invoice or statement which includes all these details: If either the seller or the buyer is using a margin scheme, their respective selling and purchase prices must be clear from the invoices you issue. You must obtain proof of export before you can apply zero rating to the sale. Such goods are often entered for relief under Temporary Admission (previously known as Temporary Importation) in order to be sold at auction. VAT also applies to this charge. Your selling price is the hammer price plus any charges for services you make to the buyer. When you opt to use the Auctioneers’ Scheme for works of art obtained from the creator or their heirs you must not reclaim any VAT charged by the supplier. This amount will form the purchase price for a VAT-registered dealer who’ll be selling the item on using a margin scheme. The Auctioneers’ Scheme option for goods on which VAT has been charged, 8. A typical auction house invoice is saying say Hammer 300.00 Premium 63.00 Charges 27.17 VAT on charges 5.43 Hammer VAT Nil. On July 23, 2019, the United States District Court for the Middle District of Tennessee ordered that the Tennessee Auctioneer Commission is enjoined and restrained from applying Tennessee’s auctioneering laws and licenses to “electronic” exchanges, or online auction websites. Goods are often entered for relief under Temporary Admission ( previously known as Importation! 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