GST/VAT on Coins

[ozjohn 552]

Just a question. When a value of a coin is stated in Spink or Collectors' coins does this include GST/VAT?  I am not sure of the answer

for Australia either. However if you are exporting a coin from Australia to say the UK exported are not liable for GST although it is now payable

on imported items at a rate of 10% . Prior to 1 July 2018 they were GST exempt  up to $1000. 

 

[Sword 1,330]

I think Spink states that their prices are what you can expect to to pay  a reputable dealer and so they should include VAT. The common feeling is that they are often too high even if they include VAT.

[Peckris 2 2,042]

Catalogues and guides that list prices are simply estimates of the coin's approximate value in whatever country / currency applies where the guide is published. Things like VAT are absolutely not relevant, as the values listed are not actual selling prices and therefore any tax would not apply.

However, when buying from a (UK) dealer, bear in mind that VAT will be included in the price asked and may have been a factor in the price the dealer decided to sell at (also bear in mind that a dealer will only use a guide to get a rough idea of the market; his actual selling price will be gauged on : 

• how much he/she paid
• what demand there is for that particular coin
• if there are particular buyers in mind 
• how quickly a sale is required 

When buying from an auction house, bear in mind that they will add VAT to the hammer price, plus whatever buyers premium applies there.

So the most important thing to remember is that a coin guide is just that - a guide. The only value a coin has is what anyone is prepared to pay for it. Tax matters are outside the scope of guides.

[PWA 1967 1,836]

I am not sure about that Peck,when you buy from a public auction unless vat registered and a business you are unable to claim it back.I doubt there would be VAT on Auction purchase as well as premium ,unless it was possibly gold ?

[Mr T 169]

21 hours ago, ozjohn said:

I am not sure of the answer for Australia either. 

I'm sure GST would be implied - I don't think you're allowed to advertise prices without GST (unless you clearly state GST isn't included). It is a price guide so I guess it wouldn't matter either way but in practice pretty much every price includes GST.

[Peckris 2 2,042]

12 hours ago, PWA 1967 said:

I am not sure about that Peck,when you buy from a public auction unless vat registered and a business you are unable to claim it back.I doubt there would be VAT on Auction purchase as well as premium ,unless it was possibly gold ?

I can't think of an auction house that would NOT be VAT registered? In any case, I wasn't talking about reclaiming VAT, just paying it in the first place, and its non-relevance to price guides (which is what I assume the OP was about?).

[PWA 1967 1,836]

Sorry Peck maybe i am getting confused 😊

Yes Auction houses will be VAT registered and has know relevance to price guides.

However what you typed was that Auction houses add VAT to the hammer price plus the premium.

[Paddy 1,539]

Just to clarify as the VAT discussion has got confused over several posts:

In the UK an auction house selling coins will add VAT to the buyers premium only. Most auction items are exempt VAT on the value of the item itself if second hand.

You can occasionally find an auction house that is too new/small to be VAT registered yet - usually small and local. A new one set up within a few hundred yards of where I live a few weeks ago and their commission was 15% with no VAT to add. Bliss! Sadly the few coins they had were C**p.

 

[Peckris 2 2,042]

11 hours ago, PWA 1967 said:

Sorry Peck maybe i am getting confused 😊

Yes Auction houses will be VAT registered and has know relevance to price guides.

However what you typed was that Auction houses add VAT to the hammer price plus the premium.

Sorry - yes you're right, VAT is only added to the premium.

But I stand by my assertion that this is not the slightest bit relevant to the values listed in catalogues and price guides, which are not offers to sell or relating to any one specific item.

[ozjohn 552]

I guess my question should have been more specific concerning dealers in the UK selling to overseas customers. Is GST/VAT levied on exported items and assuming it is and the advertised price includes GST/VAT what happens to the difference? I assume to the dealer keeps it. This disadvantages the Australian buyer by both the UK VAT and Australian GST which would add up to about 30% above the original tax free  UK price. To be fair I suspect the same thing happens when coins are sold to overseas from Australia. The only difference being GST is levied at ten percent in Australia as against twenty percent in the UK so any price increase is about half of the UK. Of course this does not include any tax levied by the Uk but this goes to consolidated revenue not a dealers bottom line. This would not apply to private sellers who often sell below the catalog price with duty being levied by customs of which they have no control over.

If anyone thinks I am wrong please say so.

Edited August 9, 2018 by ozjohn
Extra info

[Rob 2,996]

Most dealers aren't VAT registered. In the case where there is VAT to consider, a coin sold under the margin scheme has VAT due on the profit element of the price, which in the case of a coin sourced in the UK will be 20% of a variable percentage of the full cost, which in the case of a bulk purchase is quite flexible. 

New items such as accessories have VAT as applicable, but any export outside the EU is exempt from tax. Within the EU, VAT is deemed to be fully paid if charged at source, so for example, books which attract a zero rate in the UK are sold to the EU at zero rate. There is a small amount of arbitrage possible arising from the various rates of VAT payable in different countries, but is rarely more than one or two percent. 

Any import VAT is something you have to live with wherever you happen to be. We all have our various crosses to bear.

[ozjohn 552]

Rob

One difference between Australia and the UK. If your turnover is greater than a certain amount you have to have an ABN (Australian Business Number) to trade legally. I think it is a fairly low figure  somewhere in the region of $AU 75000 which would include any serious business. This is used by the ATO (Australian Tax Office ) to monitor and audit GST returns.. Perhaps not fool proof but better than the optional system you describe

 

[PWA 1967 1,836]

Its the same here ozjohn i think its £80K or about that from memory.

[Rob 2,996]

Turnover of 85K or more pa requires VAT registration. It isn't optional above this figure. 

[ozjohn 552]

 

 So my question still remains for a VAT registered coin dealer selling to Australia. What happens to the VAT component of the sale? For example

Amazon .co.uk when they sent items to Australia removed the VAT component and you received the item at a lower price.

Edited August 9, 2018 by ozjohn
more info

[Peckris 2 2,042]

This is the gov.uk guidelines:

VAT on exports to non-EU countries

VAT is a tax on goods used in the EU, so if goods are exported outside the EU, you do not charge VAT. You can zero rate the sale, as long as you get and keep evidence of the export, and comply with all other laws. You must also make sure the goods are exported, and you must get the evidence within 3 months from the time of sale. This can be longer for goods that need processing before export and for thoroughbred racehorses.

The time of sale is the earlier of the day you:

• send the goods to your customer
• get full payment for them

https://www.gov.uk/guidance/vat-exports-dispatches-and-supplying-goods-abroad#vat-on-exports-to-non-eu-countries

[Paddy 1,539]

I think the point everyone over here is trying to make is that for the vast majority of dealers in the UK, they are too small to be VAT registered and so there is nothing to claim back. The only exceptions I think would be Coincraft and some of the commemorative producers like Westminster, but I can see no reason to buy from them.

If you buy from an auction house, the big ones can probably handle the VAT return, the little ones probably not - but you are dealing with 20% of say 25% of the hammer price - so a much smaller overall percentage.

 

[Rob 2,996]

The fundamental problem here is that unlike a shop selling general items for everyday use, the treatment of coins and antiques etc is not a straightforward matter. As Paddy points out, the majority are not VAT registered and for these the question is irrelevant. For those that are, they can choose to sell under the margin scheme whereby the VAT is calculated on the difference between purchase and selling price (figures are subject to certain conditions laid down by HMRC) or they can use global accounting.

The former really only works in the case of higher value discrete items due to the amount of work required. Sellers of lower unit value items, or sales of coins purchased as part of a bulk lot are better off using global accounting rules.  In the case of the latter, there is no definable VAT (and therefore deductable) element  for any particular sale because it is a simplified scheme whereby at the end of the accounting period, the VAT due is 1/6 of the difference between the total cost of purchases and the total value of sales.  

[ozjohn 552]

Given the price of coins these days I find it hard to believe that an established dealer's turnover is less than GBP 85000 to avoid VAT registration.  Maybe that is the case. I know in Australia the ATO is trying to levy GST on online traders so far without success. 

I will give an example of charging VAT on items sent outside the EU which has nothing to do with coins. Some time ago my wife purchased some items from M&S online and no VAT was deducted even though they were being exported outside the EU. I emailed M&S  asking about this and their reply basically was that it was not the policy of the company to reduce the VAT component for  sales outside the EU.

Where did this money go? To consolidated revenue - I doubt it. To M&S balance sheet- most likely. As I said previously Amazon behaved in an honest way by refunding the VAT component to its customers. All I am saying there is a potential loop hole that can be exploited. This loophole also exists here in Australia and I am sure it is exploited just as much. As mentioned these are in general small amounts but they add up over time.

What is going to happen to VAT on items sent to Australia after the UK leaves the EU?

[Rob 2,996]

38 minutes ago, ozjohn said:

What is going to happen to VAT on items sent to Australia after the UK leaves the EU?

As you were I would think. Exports would attract no VAT, while imports would have the tax levied at the appropriate rate. There is no reason for these to change as VAT rates are set by the individual countries, and not Brussels. That's why there is scope for arbitrage within the EU.

If we go onto WTO rules after we have left the EU, then those rates applicable are clearly laid out.