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In the 2002 Budget, the Chancellor announced that changes would be made to the VAT margin schemes for secondhand goods, cars, works of art, antiques and collectors' items. In order to effect these changes, the Government laid the following before Parliament: The Value Added Tax (Cars) (Amendment) Order 2002, and the Value Added Tax (Special Provisions) (Amendment No 2) Order 2002.
In the 2002 Budget, the Chancellor announced that changes would be made to the VAT margin schemes for secondhand goods, cars, works of art, antiques and collectors' items. In order to effect these changes, the Government laid the following before Parliament: The Value Added Tax (Cars) (Amendment) Order 2002, and the Value Added Tax (Special Provisions) (Amendment No 2) Order 2002.
The changes apply to banks and financial institutions selling cars and other goods, which were obtained by the financial organisations when they were assigned the rights in a hire purchase or conditional sale agreement, and to all businesses selling goods that they obtained as the result of a transfer of a going concern. In such cases, businesses will only be permitted to use the margin scheme to sell the goods if the previous owner could have done so. Where there has been a succession of assignments or transfers of a going concern, the first person in the chain must have been entitled to sell the goods through the margin scheme.
The changes also define the purchase price to be used in the margin scheme calculation, where the seller has obtained the goods by way of a transaction that is not a supply for VAT purposes. The changes do not affect margin scheme calculations in practice, except in the cases involving assignments described above.
The changes come into effect on 1 July 2002, but will not apply to goods being sold that were acquired by virtue of an assignment that took place before that date.
(Source: Customs Business Brief 16/2002 dated 10 June 2002.)
