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VAT Global Accounting Scheme

What is a Margin Scheme?

A margin scheme is an optional method of accounting which allows you to calculate VAT on the value you add to the goods you sell, rather than on the full selling price.

What is the Global Accounting Scheme?

Global Accounting is an optional, simplified variation of the Margin Scheme. Rather than documenting profit and VAT on individual purchases the global scheme allows companies to document profit on bulk sales.

Why do we use a Global Accounting scheme?

Using a Global Accounting scheme reduces the VAT you have to pay if you sell second hand goods.

Without a margin scheme, we would have to account for VAT on the full selling price of each item. Using a margin scheme allows us to account for VAT on the difference between the price we paid for an item and the price we sold it for.

Normal RulesBuy for £200 and Sell for £250. VAT at 20% of £250 =£41.66
Margin SchemeBuy for £200 and Sell for £250. VAT at 16.66% of profit (£50) = £7.12

Which categories of goods can be sold under the margin schemes?

Second-hand goods

The legal definition of second-hand goods is goods which are suitable for further use as they are, or after repair. In most cases, goods which are second-hand in the ordinary usage of the term will be eligible for the margin schemes.

If you have bought an item and VAT is shown separately on the purchase invoice, you can’t sell that item on under a margin scheme, even if you haven’t claimed the VAT back. Hence all second hand goods sold via a margin scheme will have been purchased free of VAT.

What if I make sales under the normal VAT rules as well?

You can use a Margin/Global Accounting Scheme for some of your sales and the ‘normal’ rules for others.

Smartfonestore runs a margin scheme and a ‘normal’ VAT scheme. Hence if you are VAT registered and require a ‘normal’ invoice we can generate this for you. This will be the buy price advertised plus VAT on the full selling price.

If you are not VAT registered then we will sell you the unit(s) under the Global Account Scheme. This invoice will include the advertised sales price only. VAT is not applicable for the purchaser and the VAT column will state zero.

How do we buy and sell from other companies running the Global Accounting Scheme?

Second hand goods can be bought and sold between companies running the ‘Global Accounting Scheme’ The invoice has to include the following;

  • name and address of buyer
  • the seller’s name and address
  • invoice number
  • date of transaction
  • description of goods (this must be sufficient to enable HMRC to verify that the goods are eligible for Global Accounting, for example ‘four x Nokia 6230’ - ‘assorted goods’ is not acceptable
  • total price, VAT will not be shown separately


and, for goods purchased from another VAT-registered dealer: the statement "Global Accounting Invoice"

How do we treat sales to other Member States?

Sales made under a margin scheme to other EC Member States are treated in exactly the same way as sales within the UK.

What details must be included on purchase/sales invoices for individuals?

Purchase/Sales invoices must include:

  • name and address of buyer
  • the seller’s name and address
  • invoice number
  • date of transaction
  • description of goods (this must be sufficient to enable HMRC to verify that the goods are eligible for Global Accounting, for example ‘four x Nokia 6230’ - ‘assorted goods’ is not acceptable
  • total price, VAT will not be shown separately


and, for goods purchased from another VAT-registered dealer:

  • the statement "Global Accounting Invoice"


 
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SUPER WARRANTY
60 day warranty + 10 day no quibble returns policy
 
SPECIAL DELIVERY
All Orders dispatched by Special Delivery within 48 hours.
 
VAT DISCOUNT
Discount available for VAT registered customers
 
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CONTACT US
For all questions about orders or general enquiries please contact:
 
Email:
[email protected]
 
Telephone:
0207 404 6466
 
Office Hours:
Mon-Fri  9.30am-5.30pm
 
Address:
3 Long Yard, Holborn, London WC1N 3LS

Like most web-based retailers, we’re based in a warehouse rather than a shop so for safety reasons we can’t allow viewings or collections. However, we’re really strict with our grading system and our dispatch is very quick.
   
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