1994670 - VAT Margin Scheme for UK

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1994670 - VAT Margin Scheme for UK


You want to apply the VAT Margin Scheme for UK in Business ByDesign as part of your VAT process.


VAT margin schemes tax the difference between what you paid for an item and what you sold it for, rather than the full selling price.

You can choose to use a margin scheme when you sell:

  • second-hand goods
  • works of art
  • antiques
  • collectors’ items

You can’t use a margin scheme for:

  • any item you bought for which you were charged VAT
  • precious metals
  • investment gold
  • precious stones


You buy a work of art for £1,500 and sell it for £2,000. Using a margin scheme, you pay VAT (at the standard rate of 20%) on the difference: £500. This means you’ll pay £83.33.

Further details can be checked at: https://www.gov.uk/vat-margin-schemes



The VAT Margin Scheme for UK is not supported in SAP Business ByDesign current release.

The only way to achieve this is to change the rate to reflect the reduction in the base amount for tax calculation.
Suppose the line item price is 100 and the standard tax rate is 20%. If you want the tax base amount to be 50 instead of 100, you can change the rate to 10% as the base amount cannot be changed in the system.

This will help in calculating the correct tax amount.

However, this workaround needs to be verified by your company with relation to audit regulations that such a change in tax rate to achieve VAT margin scheme is fine or not.


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