[Techman]

It's actually very simple in that if the 'vendor' of the items being sold is a company or business that is VAT registered, then the auction house has to by law collect this VAT on the actual items on behalf of the said vendor. The vendor may be a liquidator or a clearance company or the company themselves.

At one of the large auctions that I sometimes attend, the auctioneer will announce at the beginning of the sale what the terms and conditions are in that unless stated otherwise, that there will be a percentage commission on the hammer price with VAT on that commission ONLY. Sometimes, as the sale progresses, the auctioneer will pause and announce that the following however many items will also have VAT on the actual hammer price as well as on the commission, this being due to the vendor of the said items being VAT registered. After these items have been sold, the auctioneer will announce that the VAT items are finished and that it's back to the normal no VAT on hammer price with just VAT on the commission only - and so on.

One downside to this sale room is that there's now a surcharge on items that sell for a very low price in that there's a minimum commission charge with VAT, supposedly to cover paperwork, so all those £1 and £2 lots that you might bid for just for the nuts and bolts, start to become expensive, so every £2 lot ends up at nearly a fiver, so you have to really want it to bother with it! What now happens is that the auctioneer will get down to £1 and whereas I might be tempted to just say yes for the scrap usefulness in screws and bolts etc, I now don't bother and the auction house is stuck with it. Sometimes it'll be still there at the next sale in the hope that someone will eventually buy it. I still do buy the very cheap lots, but it has to be because I actually want it. With the surcharge added, buying a few lots at what would appear to be a pound or two each can soon get expensive if you're not careful.