There are no dubious practices in the area of VAT. Ultimately, VAT is borne by the end consumer or unregistered businesses.
Let's take the example of a printer.
Manufacturing Ltd acquires raw materials and makes and sells a printer to The Print Shop Ltd. Manufacturing Ltd. charges 200 plus VAT and pays €46 to Revenue. The Print Shop Ltd claims the VAT is paid in its VAT return, minus €46. Revenue has therefore received nothing.
The Print Shop Ltd sells the printer to Numbers Accountants for €250 plus VAT. The Print Shop Ltd pays Revenue €57.50 in VAT. Numbers Accountants claims back the VAT and again there is no gain to Revenue.
Numbers Accountants decided to upgrade their printer and packs its off to Mr. Second Hand Man. They sell it for €50 and pay VAT to Revenue of €11.50 and Mr. Second Hand Man, assuming he is a chargeable person, claims the VAT. Still nothing for Revenue.
Mr. Second Hand Man sells the printer for €60 plus VAT to Ms. Jane Bloggs, private individual. He then returns the VAT of €13.80 to Revenue and the Collector-General finally gets a few quid!
The margin scheme does not apply to transactions between chargeable persons. A trader may only apply this scheme where the purchases have been made from persons who are not chargeable persons, ie not VAT registered. A trader would be at an unfair disadvantage if the purchases he made were not eligible for a VAT input but he had to pay VAT on all his sales. The second hand margin scheme applies generally to jewellery, furniture, etc that would not normally be entitled to an input of VAT by the end-user.
Invoices issued under the margin scheme should note that this scheme is in use and that the buyer is not entitled to claim a VAT input on the goods. You may often see this with second hand car parts purchased under the global accounting scheme or second hand machinery.
The Tat Shop buy an old painting of a crying kitten from me for €50. They sell it to you for €75. Revenue receive €4.67.
Sorry if I have bored anyone but I hope this is useful!