89. Margin scheme – auctioneers

Summary

This section gives effect to the auction scheme as set out in the VAT Directive. The principles governing the auction scheme are very similar to those for the margin scheme in section 87. Briefly, the section provides that where certain works of art, collectors’ items, antiques or tangible movable second-hand goods are sold by an auctioneer at a public auction, while acting on behalf of a principal, the auctioneer is liable to VAT only on his/her profit margin.

The rate of VAT applicable to a supply under the auction scheme is the same as that applicable under the margin scheme (see section 87).

Details

(1) Subsection (1) defines the scope of the section in relation to persons and goods covered by the section. The subsection also defines the auctioneer’s profit margin, which is the amount on which the tax is calculated.

“Auction scheme goods” are works of art, collectors’ items, antiques and tangible movable second-hand goods, which are sold by public auction. The auction scheme applies where the principal is a private individual, an exempt person or a taxable dealer who applied the margin scheme (as set out in section 87) to his/her supply of the goods. An insurance company which took possession of goods from an insured person in connection with the settlement of a claim is also a principal for the purposes of the auction scheme.

“Auctioneer’s margin” is the difference between what an auctioneer receives from a purchaser and what he/she pays to the principal. It is tax-inclusive.

(2) An auctioneer must apply the auction scheme to any supply by him/her, by way of public auction, of auction scheme goods as defined.

(3) The taxable amount (under subsection (3)) is the auctioneer’s margin less the amount of VAT included in that margin.

(4) Subsection (4) requires the auctioneer to issue to the purchaser and the principal written details of the transaction. (Note: The detailed requirements have not been set down in legislation – the normal commercial documents issued by the auctioneer in respect of the auction, subject to subsection (5), are sufficient.)

(5) Subsection (5) provides that an auctioneer cannot, in relation to a supply under this section, show, on the invoice issued by him/her, the amount of VAT for which he/she is accountable.

(6) Subsection (6) is a technical provision simplifying the procedures for issuing an invoice. If the principal is required under the normal VAT rules to issue an invoice (because he/she is an accountable person), the invoice issued by the auctioneer will fulfil this requirement.

(7) Where an auctioneer supplies auction scheme goods to a VAT-registered person in another Member State, the supply cannot be zero-rated and Irish VAT should be charged on the supply, as if it was a sale within the State.

(Note that auction scheme goods supplied to a customer outside the European Community qualify as exports liable at the zero rate).

(8) Subsection (8) is a technical provision arising out of the rule in subsection (7) deeming the Member State of dispatch to be the legal place of supply in an intra-Community auction scheme transaction.

(9) Subsection (9) provides that the supply of auction scheme goods to an auctioneer is regarded as taking place at the time when the auctioneer sells the goods to a purchaser at a public auction.

(10) Subsection (10) caters for the future taxation of items sold by an auctioneer under the auction scheme to an accountable person. If the accountable person subsequently disposes of such an item in the course or furtherance of business, this provision ensures that the supply by the accountable person is not exempt in accordance with paragraph 12 of Schedule 1 and is treated like any other taxable supply.

However, the subsequent supply continues to be exempt if the goods are:

• motor vehicles for which no deductibility was allowed, or
• goods used solely in the course of an exempted activity.

Relevant Date: Finance Act 2020