The stock book HMRC expects for the Margin Scheme
Last updated: 30 September 2026
To use the Margin Scheme you must keep a stock book recording each item you bought and sold under it — what you paid, what you sold it for, and enough detail to identify the individual handset. Without those records HMRC can refuse the scheme for those items, which means VAT on the full selling price rather than the margin.
- The records are a condition of using the scheme, not paperwork after the fact.
- Each item is recorded individually, with purchase and sale linked.
- The purchase side is the half that goes missing, because there is no supplier invoice.
- Keep them for six years, like other VAT records.
What each entry needs
- A stock number or reference that identifies the individual handset.
- The date you bought it and who you bought it from.
- The purchase price you paid.
- A description — make, model, and the IMEI.
- The date you sold it, and the sale price.
- The margin, and the VAT on that margin.
Why the purchase side is the weak point
When you buy from a supplier there is an invoice, and it lands in your accounts whether or not you do anything. When you buy from a member of the public there is no invoice unless you create one, and nobody chases you for it.
That is the gap. A shop with a full record of sales and a patchy record of purchases cannot evidence its margins, and the scheme depends entirely on being able to show both halves.
The practical fix is to make the purchase a recorded transaction at the moment it happens, at the counter, rather than something to write up later.
Doing it without a paper ledger
A literal book is fine and plenty of shops still keep one. The risk is that it lives separately from the till, so the two drift and neither is complete.
Mobile POS records the purchase against the individual handset by IMEI and carries the cost through to the eventual sale, so the margin and the VAT on it fall out of the transactions themselves rather than being assembled afterwards. Export it when your accountant asks.
This explains how the rules work in general terms. It is not tax advice, and how they apply to your business depends on your circumstances — confirm the treatment with your accountant before you rely on it.