How to manage margin scheme sales through your website CMS
If you are selling artworks on the margin scheme online, it is important you set up the price, tax, and margin scheme preferences correctly in the artwork record beforehand. This article will outline how you can apply the UK margin scheme to artwork records in your standalone Artlogic website CMS before enabling these works for online sale.
What is the UK Margin Scheme?
The UK Margin Scheme for works of art allows participating dealers and galleries to reduce the selling price for eligible works by means of reduced tax. The tax, in this case, is the same 20% rate but it is applied to the profit (the difference between the cost and retail price), not the entire retail price. The tax is added to the retail price as normal to form the 'Selling price' which is the only price disclosed to the customer.
The regulations can be found here: https://www.gov.uk/guidance/the-margin-and-global-accounting-scheme-vat-notice-718
If you have questions you can speak to HMRC directly here: https://www.gov.uk/government/organisations/hm-revenue-customs/contact/vat-enquiries
What are the rules?
The margin scheme has strict rules about record keeping relating to sourcing and sale of artworks.
If you are selling an artwork on the margin online, you need to work out the calculations before to get the selling price. The selling price must be the only price disclosed to the customer. If you are showing prices or using online sales, the selling price needs to be entered instead of the retail price in the price display.
Customer receipts and invoices
For any customer purchase receipts or invoices, it should be stated that the work was sold under the margin scheme and you must ensure the VAT amount is hidden.
How your Artlogic website CMS helps
In your artwork records, there is a margin scheme section. Once you've enabled the 'margin scheme applies to this artwork' checkbox, the tax rate for this artwork will be set as 0% in the customer store basket and hidden with a 'Sold under margin scheme' label within the online sales customer confirmation email.
Enabling this preference ensures the VAT is hidden and replaced with the 'Sold under the margin scheme' label for all customer purchase receipt emails.
How to set up your works on the margin scheme for online sale
- Login to CMS > Records > Artworks > All artworks > Edit Artwork
- Scroll to Price > Retail price > here you need to enter the 'Selling price' for this margin scheme work instead of the retail price.
- Scroll to Margin Scheme > Enable 'Margin scheme applies to this artwork'
- Click Save
If the margin scheme work is purchased online, the customer will receive a customer purchase receipt email with details of the transaction. Below the VAT columns, you will see the label 'Sold under the margin scheme'.
The screenshot below includes two sold items: a standard work with standard 20% VAT applied, and below this the margin scheme work with the label 'Sold under the margin scheme'.
If you'd like to see how this could look from your side, we'd recommend completing a test transaction.