If you are a seller that sells second hand goods and you are VAT registered in the UK you have to pay Margin VAT on your profit.
Say you sell £200 of second hand goods and the profit was £100 then i have to pay HMRC 20% of that profit as VAT.
Sage cannot handle this transaction, the only way you can do it is make two entries.
Is their a way in Manager software to account for Margin VAT on second hand sales?
This looks similar to flat VAT scheme. I still need to get around of coming up with solution to this. I haven’t seen an accounting software dealing with this properly.
How does the calculation works though?
Let’s say I buy Item A for £100 and sell for £50, then I buy Item B for £100 and sell for £200.
How do you calculate this profit subject to Margin VAT? Is the profit £100 or £50?
In first case, you ignore sale of item A because you made loss on it, in the second case you simply work out net profit across all items.