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Accounting for Auctions

Hi, I hope someone has came across this and can help.

I have a potential client who wants to open an auction selling cars only as a sole trader. Dealers bring their cars along to this auction and he sells them. The money is transferred into his account by whatever means and he transfers it back to the dealer less any commission charged. Does he need to report the sale of the vehicle? His personal income is the commission only but because the full sale price is going through his bank account, should he also report this. I'm thinking we need to speak to the bank on different accounts?? Also, how would this work with HMRC?? I'm unsure whether just to report the commission or the full transaction. Any help would be appreciated..

Comments

  • CeeJaySixCeeJaySix Well-Known Registered Posts: 645
    As mrme says, it is down to how the contract works.

    The norm for an auction house is that their 'sale' is the sale of the service, the fee for which is the commission (and any other charges levied on the buyer or seller, for example valet costs, storage, fuel, de-logoing of commercial vehicles, etc etc). They do not buy or sell the vehicle itself and those costs/revenues do not therefore touch the accounts.

    However there will likely still be debtors/creditors for amounts due to/from the auctioneer on account of vehicles sold as all payments go through them and are therefore assets/liabilities of the business.

    Specialist auction accounting software is available that couples to your 'normal' accounting package (Sage etc).
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