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VAT
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I am about to set up an antiques shop. How is VAT likely to affect me?
You will have to register for VAT if your turnover exceeds £58,000 within any twelve-month period. Under the normal VAT rules, you have to charge VAT on the full value of any goods you sell, even though there will probably be no input tax to deduct on most purchases. However, there is a special optional scheme for second-hand goods in which VAT is charged only on the excess of selling price over purchase price (the margin) for each item.
You can reclaim the VAT you are charged on business overheads, repairs, parts or accessories etc., but such costs should not be added to the purchase price of goods you sell under the margin scheme.
Some businesses trading in large quantities of low value second-hand goods find it difficult to comply with the detailed accounting procedures. There is a further optional scheme of global accounting that works on total sales and purchases rather than on individual items. Apart from simplifying your record keeping, global accounting will effectively allow you to have the benefit of any losses on particular items.
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