If you buy or sell gold business to business in the UK, you usually do not put 20% VAT on the invoice the way you would on a watch strap or a repair. Gold has its own rule, the Special Accounting Scheme for gold, and it flips who pays the VAT to HMRC.
Get the invoice wording wrong and one of two things happens. Either you charge VAT you should not have charged, or your buyer cannot work out what to account for. Both cause queries, and both can land on an HMRC officer's desk.
This guide shows you exactly how to invoice gold under the reverse charge, with a full worked example, the exact form of words HMRC suggests, and which boxes the seller and the buyer each complete on the VAT return. It is written for UK jewellers, bullion dealers and gold traders.
What is the gold reverse charge?
The gold reverse charge means the VAT-registered buyer, not the seller, accounts for the VAT on a supply of gold to HMRC. The seller issues a VAT invoice but does not add the VAT to the amount the buyer pays.
This sits in HMRC's Special Accounting Scheme for gold, set out in VAT Notice 701/21. It exists to stop "missing trader" fraud, where someone charges VAT on gold, pockets it and disappears before paying HMRC. By making the buyer self-account, there is no VAT cash for a fraudster to run off with.
The scheme only applies where both the seller and the buyer are registered for VAT in the UK, or are liable to be registered. A sale to a member of the public is not within the scheme, so you handle that under the normal rules.
Which gold does the special accounting scheme cover?
This is where jewellers trip up, because "gold" for this scheme is narrower than "anything gold-coloured in the shop".
The scheme broadly covers transactions in:
- Fine (pure) gold, including gold grain of any purity, and gold coins.
- Goods that contain gold where the price you pay or charge (before VAT) does not exceed the open market value of the gold contained, or exceeds it by no more than a negligible amount. In plain terms, gold bought or sold for close to its bullion value.
- Investment gold on which the option to tax has been exercised, and certain London Bullion Market dealings, whether treated as a supply of goods or of services.
- Treatment or processing work carried out on a customer's gold.
Investment gold itself is normally exempt from VAT. To count as investment gold, a gold bar or wafer has to be "of a purity not less than 995 thousandths". Investment gold coins are minted after 1800, are of a purity "of not less than 900 thousandths", are or have been legal tender in their country of origin, and are normally sold at a price not more than 180% of the open market value of the gold they contain.
The scheme specifically does not cover several things jewellers handle every day. HMRC excludes "supplies of dental gold, gold targets and gold slugs", part-manufactured or finished jewellery, gold compounds, and most semi-manufactured carated products (gold grain being the exception). Coins sold under the second-hand margin scheme are also outside it.
So a finished 9-carat ring sold to a customer is ordinary standard-rated VAT. A kilo of fine gold bullion sold to another registered dealer is the gold reverse charge. Knowing which side of that line you are on is the whole game.
If you want a sanity check on how your specific stock and supplies are treated, our accounting for jewellers service maps it for you.
What must a gold reverse charge invoice show?
If you make a supply of gold under the Special Accounting Scheme, you must issue a VAT invoice showing all the information a normal VAT invoice needs. On top of that, HMRC expects the gold-specific details and a clear statement about who pays the VAT.
The amount of output tax due under the scheme must be clearly stated on your invoice, but it must not be included in the figure shown as total VAT charged. You show the VAT figure for information, then leave it out of the VAT you are actually charging the buyer.
Your invoice must also carry a form of words making clear the buyer accounts for that VAT. HMRC's suggested wording is:
"£…… output tax on this supply of gold to be accounted for to HMRC by the buyer."
Alongside the usual VAT invoice details (your name, address and VAT number, the buyer's name and address, a unique invoice number and the invoice date), a gold invoice under the scheme should record the gold specifics: the time of supply or delivery date, and the weight, purity, number of items and the fix price used.
A quick checklist
- All standard VAT invoice information.
- The buyer's name and address (the buyer must be UK VAT registered).
- Weight, purity, number of items and the fix price.
- The VAT amount stated separately, for information only.
- The VAT amount excluded from the total VAT charged.
- The statement that the buyer accounts for the VAT to HMRC.
Gold reverse charge invoice example
Here is how it looks in practice.
Illustrative example. Halewood Bullion Ltd, a VAT-registered London dealer, sells one 1 kg fine gold bar (995 purity) to Aurora Goldsmiths Ltd, another VAT-registered business. The agreed fix price for the bar is £62,000 before VAT. Because this is fine gold sold dealer to dealer, the Special Accounting Scheme applies, so Halewood does not charge the VAT.
The invoice would read along these lines:
| Field | Detail |
|---|---|
| Seller | Halewood Bullion Ltd, VAT no. GB 123 4567 89 |
| Buyer | Aurora Goldsmiths Ltd, 14 Vyse Street, Birmingham |
| Invoice number / date | INV-2048 / 29 May 2026 |
| Time of supply | 29 May 2026 |
| Goods | 1 x fine gold bar, 1,000 g, purity 995 |
| Fix price (net) | £62,000.00 |
| VAT at 20% (for information, not charged) | £12,400.00 |
| Total payable by buyer | £62,000.00 |
The invoice then carries the statement:
"£12,400.00 output tax on this supply of gold to be accounted for to HMRC by the buyer."
Notice the total the buyer pays is £62,000, not £74,400. The £12,400 is shown so everyone can see the VAT in play, but it is not added to the bill and is not in any "total VAT charged" box on the invoice. The buyer deals with that £12,400 on their own VAT return.
Arithmetic check: £62,000 x 20% = £12,400, and £62,000 + £0 charged VAT = £62,000 payable. That ties up.
How do the seller and buyer fill in the VAT return?
This is the part that most often gets entered wrongly, so here is each side, based on HMRC's VAT return guidance (Notice 700/12).
| VAT return box | Seller (Halewood) | Buyer (Aurora) |
|---|---|---|
| Box 1 (output VAT) | Nothing for this supply | £12,400 |
| Box 4 (input VAT) | n/a | £12,400 (if fully recoverable) |
| Box 6 (net value) | £62,000 | £62,000 (value of the deemed supply) |
| Box 7 (purchases) | n/a | £62,000 (purchase value) |
The seller does not put the VAT in box 1. They only report the net value of the supply in box 6.
The buyer self-accounts. They enter the £12,400 as output VAT in box 1, and where the gold is used for taxable purposes they reclaim the same £12,400 as input VAT in box 4. They also show the value in box 6 (the deemed supply) and the purchase value in box 7.
For a buyer who can fully recover input VAT, box 1 and box 4 cancel out, so there is no net VAT cost. The reverse charge is cash-flow neutral for them, which is exactly the point. If the buyer cannot fully recover (for example because of exempt sales), the box 4 figure is restricted and some VAT sticks.
Both seller and buyer must keep records of the transaction, including the VAT on the sale price and the purchase price, for six years.
Reverse charge, exempt or margin scheme: which applies?
Gold can fall into three completely different VAT treatments, and picking the wrong one is the most common error we see.
| Situation | VAT treatment | What you charge |
|---|---|---|
| Fine gold or gold near bullion value, sold to a UK VAT-registered buyer | Special Accounting Scheme (reverse charge) | No VAT added; buyer self-accounts |
| Investment gold (995 bars, qualifying coins) | Exempt (option to tax available in limited cases) | No VAT |
| Second-hand jewellery or numismatic coins sold above bullion value | Margin scheme | VAT on the margin only |
| Finished jewellery sold to a consumer | Standard rated | 20% VAT on the full price |
The margin scheme boundary catches a lot of coin dealers. The VAT margin scheme can apply to gold coins of genuine numismatic (collector) interest, but HMRC's manual is blunt about the limit: gold coins are excluded from the margin scheme as precious metals "if they are sold for less than the open market value (excluding VAT) of the gold which they contain". Sell a coin below its bullion value and it drops out of the margin scheme and into the special accounting scheme for gold instead.
Investment gold is a different lane again. It is exempt, so you do not charge VAT and you do not use the reverse charge wording. Mixing these up, putting reverse charge wording on an exempt investment gold sale, is a frequent mistake.
Other rules gold dealers should not forget
The VAT treatment is only one part of trading gold compliantly.
If you accept or make cash payments of 10,000 euros or more (or the equivalent in any currency) for goods, you are a high value dealer for money laundering purposes and must register with HMRC for money laundering supervision before you take that payment. HMRC also treats linked smaller payments, and payments deliberately broken down to stay under the limit, as caught. Card and cheque-only businesses, and pure service businesses, do not need to register on that basis.
On the direct-tax side, capital equipment you buy for the workshop, such as a new laser welder, melting furnace or safe, can usually be claimed against your profits through capital allowances. Most plant and machinery qualifies for the Annual Investment Allowance, which gives 100% relief on up to £1,000,000 of qualifying spend in the year (the AIA limit since 1 January 2019). That is separate from the VAT on the kit, which follows the normal recovery rules.
Want a clear, jeweller-specific handle on VAT, the gold reverse charge and your wider numbers? Talk to a Zmartly accountant for jewellers and we will make sure your gold invoices and returns are right first time. You can also see how we handle VAT and tax advisory work for trades like yours.
FAQs
Do I charge VAT on a gold reverse charge invoice?
No. Under the Special Accounting Scheme for gold you do not add VAT to the amount the buyer pays. You show the VAT figure on the invoice for information only and state that the buyer accounts for it to HMRC. The buyer self-accounts on their own VAT return.
What wording goes on a gold reverse charge invoice?
HMRC's suggested form of words is: "£…… output tax on this supply of gold to be accounted for to HMRC by the buyer." You insert the actual VAT figure and keep that figure out of the total VAT charged on the invoice.
Which VAT return boxes do I use for the gold reverse charge?
As the seller, you report the net value in box 6 only and put nothing in box 1 for that supply. As the buyer, you put the VAT in box 1 (output) and, if recoverable, the same amount in box 4 (input), plus the value in box 6 and the purchase value in box 7.
Does the gold reverse charge apply to finished jewellery?
No. Finished jewellery, part-manufactured jewellery and most carated products are outside the scheme. A finished ring or chain sold to a customer is standard-rated at 20% in the normal way. The scheme is aimed at fine gold, gold grain, gold coins and gold sold at or near its bullion value between VAT-registered businesses.
Is investment gold the same as the gold reverse charge?
No. Investment gold (for example 995-purity bars or qualifying coins) is exempt from VAT, so you do not charge VAT and you do not use reverse charge wording. The reverse charge applies to taxable supplies of gold between registered businesses under the special accounting scheme, not to exempt investment gold.
Do I have to register for money laundering supervision?
If you accept or make cash payments of 10,000 euros or more (or the currency equivalent) for goods, you are a high value dealer and must register with HMRC for money laundering supervision before taking the payment. If you only take card or cheque, you do not need to register on that basis.
