Hi Michael
We don’t directly support the VAT margin scheme, but this topic may be of use:
[Edit]
I’ve checked this with a colleague, as it seems a bit complex. We believe the rules for the VAT margin scheme have changed since the post I linked to above too.
We understand that VAT cannot be reclaimed by your client from the invoice, and as such you would need to issue a zero rated invoice.
You’d then have to set up a client called something like “VMS Adjustments” and create a second invoice to account for the 16.67% VAT. 16.67% is the VAT that the seller must pay on the profit (as of March 2016 - source).
The 16.67% rate will need to be added to the QF account first as it’s not a standard rate. You can do this in Account Settings >> Advanced Features.
Now the VMS Adjustments invoice should look like this:
This second invoice is not issued to anybody but will ensure the VAT is levied on the margin.
You could of course just track all this on a separate spreadsheet and use adjustments before posting the VAT return. If you’re processing many of these types of transactions then this may be the easier (and potentially quicker) route.
But, we aren’t accountants, so the best advice I can give is ask a professional.
I hope that helps?