You should read this notice if you’re an auctioneer and you want to know about the Auctioneers’ Scheme. A customer who purchases items in the amount of $ 500 and above or 10 items or more will be eligible for a 15% + commission fee on the commission only. We’ve updated the notice to reflect the VAT rate of 20%. Christie’s charges a single Seller’s Commission rate for the services we provide. A marketing fee is charged at £10 (plus VAT) per lot. There are special rules about how to calculate your buying price, your selling price and your margin under the scheme. Flat rate – Many Auctioneers and Auction Companies charge a commission that is a flat rate. We will explain auction commission charges and UK auction costs including fees and how much it costs in real terms. Don’t include personal or financial information like your National Insurance number or credit card details. You’ll be able to sell the goods at the zero rate outside the scheme if you can meet the conditions in Notice 703, but your services will normally be standard-rated. The information in this notice used to be contained in Notice 718: Margin Schemes for second-hand goods, works of art, antiques and collectors’ items. If you leave the subject blank, this will be … The buyer must be able to establish the sales price for those items which were sold under the Auctioneers’ Scheme. Buyer’s premium is a tradition that dates all the way back to Roman auctions during the reign of emperor Augustus. 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. 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. So the formula is: commission_amount = sale price * commission_percentage / 100. Your purchase price under the standard margin scheme option will be the hammer price only. The costs for selling a house at auction include a commission of 2%+VAT of the final sale price, only paid upon successful sale. You pay import VAT at 5% on this value (£25). If, after reading this notice, you need any further help or advice, contact our VAT Helpline. When you sell an item under the scheme, you must issue an invoice to both the buyer and the seller. For more information about the special 3 part form for the sale of horses and ponies under the standard margin scheme, see Notice 718. Download (doc, 19.97 KB) × E-mail This Page. The detailed conditions for using the Auctioneers’ Scheme are explained throughout this notice. 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. 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. You may use the Auctioneers’ Scheme to sell the goods on behalf of a pawnbroker if: The 3-part form is a document which can be used to account for VAT on the sale of horses and ponies under the standard margin scheme. We have moved the information which is relevant to auctioneers who opt to use the Auctioneers’ Scheme into this separate, shorter notice. So now you know how to calculate commission. You must obtain proof of export before you can apply zero rating to the sale. 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. 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. 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. If you’re in any doubt, check the list at the end of Notice 718. If this is the case Robert Perera Fine Art can guide you through the process with their experience and market analysis and recommend an auction house that fits your requirements. Currently they process the payments through their tills and are taking 20% out of the sale before calculating their commission. If a buyer wants to drop out of the auction, he must signal the auctioneer. We use cookies to collect information about how you use GOV.UK. So if a property sells for £200,000 the commission payable to the auctioneer would be £4,000 + VAT. A seller’s commission rate is confidential between an auction house and the consignor. The margin you calculate under the scheme may not be the same as your profit margin. An example of typical Auction Fees in London In other words, it doesn’t become $11,450,000 because of some change in auction house policy. You’ll need to include the full title of this notice. If the 6 year rule causes you serious storage problems or undue expense, then you should consult our VAT Helpline. This means that you should allocate any charges included under the scheme against each separate lot. We will explain auction commission charges and UK auction costs including fees and how much it costs in real terms. You must calculate your purchase price in accordance with the rules in paragraph 3.1. Look on the back of fine art greetings cards and see who has provided the image. Notice 700/21: keeping VAT records gives guidance on the general records you must keep if you’re registered for VAT. It’s important to check with the seller whether the goods are eligible for inclusion in the Auctioneers’ Scheme before you auction them. 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. If you sell the item under the Margin Scheme, you must charge commission to the seller on a separate invoice, and account for VAT on the full amount. When you calculate the margin under the scheme, you: Section 3 provides full guidance on how to calculate the VAT due under the scheme. I sell prints in a local store that is vat registered on a commission basis ( they get 40%). Other wider factors can include the economy, stock market, current bad news, sporting events and even the weather including heatwaves or snow! Most notably, the tractor was bought by an Irish man. An example of some fairly typical UK Auction House terms of sale. For example, buyer’s premium or other commission, or incidental expenses such as packing, transport and insurance costs. Most art auction  houses charge an unsold charge and insurance before you can get your picture back. Sales made under the Auctioneers’ Scheme from Northern Ireland to EU member states are treated in the same way as sales within the UK. Commission in an amount equal to six percent (6%) of the total sale price of the Property, payable at closing. 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. The creator, or their heir, will have to account for output tax on the full hammer price, so they may ask you to sell the item under the option for the standard margin scheme (see Notice 718), rather than the Auctioneers’ Scheme. The auctioneer who charges a commission or fee, exclusive of VAT, of say, €5,000 in respect of the sale of a house is liable for VAT on thisamount at the standard rate. Tax is also included in the selling process including VAT and import duty. In UK law, Section 50A of the VAT Act 1994 allows the Treasury to make Orders to introduce second-hand schemes. 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). However, you must obtain proof of export, as described in Notice 703, when you apply zero rating to the margin. The main ones are: You must calculate the margin in accordance with the rules of the scheme. Because these 2 supplies happen at the same time, they share a common tax point. Charges & Commission to Sellers. Other auction houses You normally* pay a buyer's premium (commission fee) of 22,5% incl. You need to find a local or London auction house to value your item. A sale can depend on many factors. Fees can be substantial for both buyers and sellers. The item is valued at import at £500. Do not include any personal or financial information like your VAT number. When you calculate your buying and selling prices under the Auctioneers’ Scheme, you must always include: For more information about insurance provided by a third party, see Notice 718. This is so that the seller will be able to reclaim the input tax on those charges. It is important to match your items value and quality to the correct auction house and market. 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. The winning buyer p… 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. 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. Plus an entry fee, although some auctioneers don’t charge for this. There is also a loss/liability charge of 1.5% (plus VAT… If your property sells at auction, you will receive a notification informing you of the hammer price - the winning bid for a lot at auction - that your item achieved. See Notice 703: exports and removals of goods from the UK for more information. Subject . When a painting is unsold it is usually listed on worldwide art sales databases as an unsold picture, which can be unhelpful to a future sale as it may put off  future potential buyers. The tractor changed hands at today’s Cheffins’ Cambridge Vintage Sale at … The rules about declarations on Auctioneers’ Scheme invoices have changed, see section 4 for details. Read Your Charter to find out what you can expect from HMRC and what we expect from you. This amount will form the purchase price for a VAT-registered dealer who’ll be selling the item on using a margin scheme. As the price goes up their commission goes down. How the VAT Auctioneers Scheme works and when you may use the scheme to account for VAT on the supplies you make. There is an auction for Tiffany Vintage Jewelry at a famous auction house in London. If you’re not sure whether your records meet the Auctioneers’ Scheme rules, contact our Helpline. At the end of each tax period you’ll need to fill in a VAT return. They purchased artists of the day including. Paragraphs which have the force of law are indicated by a statement. We base our commission rates according to your sale and what you have to offer. The legal definition of second-hand goods is goods which are suitable for further use as they are, or after repair. We’ll send you a link to a feedback form. You can use a margin scheme for some of your sales and the normal rules for others. One is now charging £10 for a condition report. An Extra Statutory Class Concession, introduced with effect from 1 January 1999, allows the Auctioneers’ Scheme to be used for the sale of all goods grown, made or produced (including bloodstock or livestock reared from birth) by non-taxable persons. Again, all of this is standard practice within the industry. When you sell a horse or pony on behalf of a person who’s not registered for VAT to a person who is registered, you should complete your name, address and lot number on the reverse of part A (white) of the buyer’s form. Sample -- Notice of Auction Sale. If the vendor is VAT-registered, they’ll be able to reclaim the VAT on the separate commission invoice if you’ve used the Margin Scheme for the sale. The Auctioneers’ Scheme is a variation on the standard margin scheme for second-hand goods, works of art, antiques and collectors’ items. They often charge storage if you do not collect you item on time. There are several variations of the English auction. (£30 + £20 = £50.). This means the seller gets the hammer price minus the sales commission. This is determined by reference to the actual sale of the goods at auction. Further information is available in notice 703. 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. If you’re unhappy with HMRC’s service, contact the person or office you’ve been dealing with and they’ll try to put things right. 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. 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. To convert amounts into foreign currencies you must use one of the methods outlined in Notice 700: the VAT Guide. If that all appears a bit bewildering, don’t worry, it’s much simpler than it sounds. Your selling price is the hammer price plus any charges for services you make to the buyer. 3.3 uyer’s Premium. CORONAVIRUS (COVID-19) - We are still buying pictures as usual at Robert Perera Fine Art during this challenging time. This is because the capping rules prevent input tax being claimed on invoices over a particular age. 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. There can be regional differences and like any service some are better than others and they all charge fees! The 3-part forms come in numbered sets, with a VAT summary sheet at the back. The auction starts and the first piece on sale is a vintage ruby and diamond choker. 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. This page has been updated because the Brexit transition period has ended. 40% on all items plus labor, marketing, etc. To calculate your margin, you subtract the purchase price from the selling price. in a week time from the auction. The sales are liable to VAT in the UK. It will take only 2 minutes to fill in. If you choose to do this, you must ensure that each supply can be clearly distinguished. Using a margin scheme means that you do not have to account for VAT on the hammer price of the goods. All content is available under the Open Government Licence v3.0, except where otherwise stated, 3. If you sell zero-rated goods, for example antique books, your margin will also be zero-rated. The Auctioneers’ Scheme option for goods on which VAT has been charged, 8. If you need general help with this notice or have another VAT question you should phone our VAT helpline or make a VAT enquiry online. Find out how HMRC uses the information we hold about you. 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. There are also some items which would benefit from an auction arena. Sliding Scale – Some Auctioneers And Auction Companies charge a commission that adjusts based upon the price of items. If you have any feedback about this notice email: customerexperience.indirecttaxes@hmrc.gsi.gov.uk. 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. Paragraph 3.2 explains which charges can be included in your scheme calculations. If you issue an invoice under the Auctioneers’ Scheme in a foreign currency, including the euro, you must show the sterling equivalent for each element of the supply. 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. However, if you do not maintain a stock book, you must retain sufficient alternative records which provide the information required in Notice 718. You also have to hope that the buyer pays their bill on time at auction, which they don’t always do! Those looking to hire an auctioneer often compare seller commissions to help them determine which auctioneer to select. There are detailed examples of calculations in section 8. But you may include all those goods on the same invoice. Not everything which somebody might collect will be included in the legal definition of a collectors’ item for margin scheme purposes. The sales person works on a commission - he/she gets 14% out of every transaction, which amounts to $9.80. Whichever method you adopt, you must use the exchange rate that’s current at the time you make the supply. As of this auction, change in commission rules The sales commission is 20% + VAT on the commission only. If the purchase invoice shows a separate VAT amount, the item is not eligible to be sold under the scheme. If we cannot check the margins you’ve declared from your records, VAT will be due on the full selling price of the goods you’ve supplied, even if they were otherwise eligible for the scheme. If VAT is included in the guide price, the rate should be made clear so that consumers are able to calculate the base valuation of the lot: • Guide price £700 + 20% VAT + fees • Guide price £1200 - £1800 (inc. 20% VAT) + fees Where the VAT status of a lot is contested or … You’ve accepted all cookies. I work for an auction house that on the sale side will take 10-15% commission. An example calculation: a blue widget is sold for $70. 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. It’s important that you keep to these rules so that you can continue using the Auctioneers’ Scheme. While you can change any tradition, however old, … 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. Equally common in the world of movies, tense bidding back and forth occurs as wealthy and desperate characters seek to outmaneuver each other as the audience in the auction house look on and gasps in suspense. 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. These include particularly rare items, museum pieces or where a value cannot be established by other routes. VAT also applies to this charge. You can find details of import procedures and special arrangements for supplies of temporarily admitted goods in Notice 702: imports. Auctioneers spend much of their working lives assessing the value of possessions. This notice assumes that you have a working knowledge of basic VAT principles, as outlined in Notice 700: the VAT Guide. You must view and inspect any propertyin which you are interested well before the auction date - or get someone you trust to do so on your behalf if the property is in a distant location. For the special rules about the legal definition of a second-hand motor vehicle, see Notice 718/1: the Margin Scheme on second-hand cars and other vehicles. Once the auction has taken place, the goods are: If imported, the goods qualify for the reduced rate of VAT but the buyer’s premium does not. You can find further information about those rules in Notice 700: the VAT Guide. 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. Yes, auction houses set their own rates and they should be shown on their web sites. 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. Below is an outline of the potential pitfalls of selling in auctions. This means a 25% discount on the commission! You will be making a combined supply of goods and services, with VAT due on the profit margin, if you: The liability of your services will follow that of the goods, with the result that the whole supply will be zero-rated. You can only use the scheme to account for sales of air guns if you are registered under the Firearms Act 1968. Not surprisingly, some choose the auctioneer with the lowest commission. You sell the item under the Auctioneers’ Scheme option for imported works of art, antiques or collectors’ items. 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. Ship it to the auction and wait. Sunday, March 2, 2003. Catalogues, as today, were published before the sale date. 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. 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. So no mention on VAT on the Premium even though as noted by the 2 replies there should be VAT on the Premium. One auction house charges £30 after three days,  £100 after ten days and then £10 per day. You sell the item under the Auctioneers’ Scheme. The buyer of your fine art item usually has to pay: British auction houses typically take around 50% out of the deal between you and the buyer! 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. We may be able to allow you to keep some records for a shorter period. A County tractor sold for a very considerable £132,000 (plus VAT; plus 6% buyer’s commission) today (Saturday, October 19) at an auction in England. 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. Sales made from Great Britain to EU member states are exports. The legal definition of an antique is an item, other than a work of art or a collectors’ item, which is over 100 years old. If you invoice in your own name and sell goods which would be eligible for sale under the Margin Scheme, there are several options you can choose from to account for VAT on your sales. The cost of the auction house staff + VAT is being passed on to you, the buyer in the form of a buyer’s premium. Example: An estate with an automobile in excess of $10,000.00 versus an estate with an older model vehicle valued less then $1,000.00 would not deserve the same commission rate. This rate includes marketing costs and insurance cover (except for Wine sales, where marketing and insurance are charged separately). 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. 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. Here are the special rules you must follow for any goods which you’ve bought or sold under a margin scheme during the tax period: There’s no requirement to include margin scheme purchases or sales in boxes 8 and 9 of your VAT return. When you sell a horse or pony on behalf of a person who is selling it under the standard margin scheme and is using the 3-part form, they’ll give you parts B (pink) and C (yellow) of the partially-completed form. So, from that perspective, it would seem, to me at least, that the auctioneer is actually … The standard commission charge to the Vendor is 10% for individual items that realise £500 or more. To calculate the VAT on the sale, you multiply the margin by 1/6 (the VAT fraction). declare that I am not registered or required to be registered for Value Added Tax and that the goods detailed below are to be sold at auction on my behalf by (auctioneer’s name). Tax is also included in the selling process including VAT and import duty. The legal definition of works of art includes pictures, paintings, collages and drawings executed by hand by the artist. If you are in any doubt, you should refer to section 20 at the end of Notice 718: the Margin Scheme and Global Accounting, where we have reproduced the law on eligible goods. During the 19th Century the market was driven by new collectors and wealthy industrialists. The process of selling Fine Art at auction is the same as the early days. ) covers all goods other than cars 20 % out of the,! 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Rate of 20 % + VAT s commission rate is confidential between an auction house value... For further use as they are, or incidental expenses such as packing, transport and insurance charged. £10 ( plus VAT ) per lot payments through their tills and are taking 20 % + VAT on sale! 'S premium ( commission fee ) of 22,5 % incl Vintage sale at … are...