We Buy Tractors

Charging VAT on items auctioned from Non-VAT vendors

The company hosts periodic auctions where the public can submit their items to be sold on their platform. Part of the terms of the auction is that they charge VAT on all items sold on the auctions. The problem is an auction is considered an Agent, as it provides a service by facilitating a sale, it does not sell anything. Article 54 of the VAT Act is quite clear that where a sale occurs between a seller and a buyer with the assistance of an agent, the sale is considered directly between the seller and buyer. They should therefore apply the flow through principal and only charge VAT on the item if the seller is VAT registered. This means that whether the agent, in this case We Buy Tractors, is registered for VAT is only relevant to the commission that they earned in the process. It is not relevant to the item sold, as they only delivered a service and sold nothing. Since We Buy Tractors charges VAT in all sales, it leads to a situation where if both seller and buyer are not VAT registered, the buyer will be out of pocket, since no VAT should have been charged, yet the seller only receives the bid amount, and not the VAT portion, meaning We Buy Tractors is left with that VAT portion. I tried explaining this to the company hoping to resolve the issue, but was sent from pillar to post, and finally ignored.