Auction houses and VAT charges

Wade4758

Hello there,

New to forum, and I’m after some advice. For last 24 months, I have been using auction houses.

I recently I sold some items (for the first time) with auction house, and received the remittance. I was devastated to find the final sum value a pittance as it has been gobbled by the auction houses commission fees.

I have studied the proforma for the bill of goods, and on the breakdown of charges it states commission charge of 15% (whooping 15%) plus VAT. Then goes on add various like loss, and damage warranty and marketing, and then adds VAT individually to each item.

This can’t be right, surely!? I understand the auction house has a duty to charge VAT on the hammer price of item(s) and not all item sold incur VAT, but adding VAT to individual services can’t be right, it should be applied at the end of the final sum, at 20%.

This is just a blatant rip off, I want to take this matter further, but I’m not sure who to contact, it definitely needs to be investigated it seems like these auctions houses are completely unregulated.

martindow

Yes, auction houses set their own rates and they should be shown on their web sites. Fees can be substantial for both buyers and sellers.

Adding VAT individually or to a a total cost shouldn't change the final figure - Three sums of £10 with VAT of £2 each comes to £36 the same as £30 plus £6 VAT.

Bricks and mortar auction house fees make Ebay and Paypal seem like a bargain!

LadyDee

All "services" are subject to VAT - it's just that we don't as a rule see the breakdown. It really is up to you to establish what fees you are likely to have to pay. Auction houses actually have a double dip, because they charge buyers fees on top of the hammer price too!

charlies_mum

The auction house's terms and conditions would have been stated when you entered your items.

I'm not sure where you intend to take it but you won't win.

mrcol1000

As above. You are told fees before you sell (and before you buy). They don't hide it. They provided a service so are required to charge VAT. There are various ways to sell items for free or next to nothing. Auction houses are quicker and less hassle but obviously you have to pay for that.

I would just move on with your life and if you are going to use an auction house again, get clarification of what they will take off your sale price and VAT before agreeing to use them.

Wade4758

Yes they definitely double dip that is for sure!

Wade4758

LadyDee wrote: »

I'm not sure where you intend to take it but you won't win.

I think the business needs to be audited by the tax man personally. Itemising a VAT charge per item is definitely not right, whether this is a clerical error or bad phrasing remains to be seen. The sums don't add up it is a discrepancy.

mrcol1000

Wade4758 wrote: »

I think the business needs to be audited by the tax man personally. Itemising a VAT charge per item is definitely not right, whether this is a clerical error or bad phrasing remains to be seen. The sums don't add up it is a discrepancy.

If they starting looking too closely to auction houses, I think the whole sector would collapse. Dodgy VAT calculations are just the tip of the iceberg of how some of them operate.

comeandgo

I don't understand your comment on itemising a vat charge per item? Surely the result is the same whether vat added on per item or as one total at end?

motorguy

Wade4758 wrote: »

I think the business needs to be audited by the tax man personally. Itemising a VAT charge per item is definitely not right, whether this is a clerical error or bad phrasing remains to be seen. The sums don't add up it is a discrepancy.

And the tax man is going to do that based on your one transaction?

Sadly, i'd expect their fees are clearly documented and are designed to discourage people selling low value items (which take as much effort and time for them to sell as high value ones) and if they do have to sell them, they make sure they get enough fees to make it worth their while - to the detriment of the seller.

dlusman

but adding VAT to individual services can’t be right, it should be applied at the end of the final sum, at 20%

Like everyone else I dont understand your complaint about doing Vat on each charge - rather than as a total

To take a worked example :
If your costs are 10 , 20 , 30
then 20% on each would be 2 ,4,6
so total ex-vat value of 60 , total vat of 12

but if you take a single total of 60 then 20% = 12 , so exactly the same