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Readers’ forum: Is there a timing error with VAT paid under margin scheme?

06 May 2024
Issue: 4935 / Categories: Forum & Feedback , VAT
Work of art

I think that one of my VAT registered clients has made a timing error in accounting for VAT on the sale of a painting with the second-hand margin scheme for works of art.

He paid £50 000 to a private seller in April last year to purchase the painting and then found a buyer in June who paid a non-refundable deposit of £60 000 for the painting. The buyer paid a further amount of £55 000 in August when the painting was delivered to his mansion and the final balance of £55 000 was paid on 6 October. My client completes calendar quarter returns and accounted for output tax of £20 000 on his December return (ie £120 000) profit margin x 1/6. However I understand this is incorrect? If so do we need to do an error correction disclosure to HMRC to adjust the VAT into...

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