A Guide to the Loco London Precious Metals Market
Her Majesty’s Revenue & Customs (HMRC) considers Full Members of the LBMA to be official members of the market that can therefore trade under the terms of the Terminal Market Order (TMO).
The TMO, the oldest part of the UK’s Value Added Tax (VAT) legislation, was intended to be VAT neutral. It was put in place to minimise the VAT administration burden as far as the UK commodity markets were concerned in order to maintain their competitiveness, particularly in regard to non-EU markets.
A Memorandum of Understanding (MOU) has been signed between HM Revenue & Customs and the LBMA and the LPPM. It is intended to assist members of both associations to:
- understand the transactions that take place on the London bullion market
- determine the supplies that take place for VAT purposes
- determine the liability to VAT of those supplies in respect of the different precious metals and markets
- confirm those transactions that need to be reported on quarterly statistical reports of cross-border services.
The purpose of the MOU is to provide background information on trades typically effected by LBMA and LPPM members, their current treatment for VAT purposes and where greater clarity and certainty can be introduced. The MOU is available on the LBMA and LPPM websites.
Other Platinum Group Metals (rhodium, ruthenium, iridium and osmium) do not fall within the scope of the Terminal Markets Order and are subject to a separate VAT regime.
16. Market Regulation
Over The Counter precious metals are traded in a wholesale market for professionals; hence, like the foreign exchange market, it is not directly regulated as a market, although the various products, firms and activities are subject to a number of regulations