How we set up an East Ham jeweller on the right VAT scheme, £9,300 saved
Client K runs a jewellery business on High Street North dealing in new and second-hand gold, much of it bought from private customers selling or part-exchanging. The previous accountant had registered for standard VAT, meaning Client K was paying 20% on the full sale price of second-hand items bought VAT-free from individuals, a heavy and unnecessary cost.
We reviewed the trade. New jewellery is standard-rated, but for the second-hand gold and jewellery bought from private (non-VAT-registered) sellers, the VAT Margin Scheme charges VAT only on the margin, the difference between purchase and sale price, not the full sale value. We set up the required stock-book records for the second-hand items, kept the new stock on standard VAT, and corrected the recent returns.