Business promotion schemes ― coupons and vouchers

By Tolley
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The following Value Added Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Business promotion schemes ― coupons and vouchers
  • Promotion schemes
  • Coupons
  • Face value vouchers (treatment until 1 January 2019)
  • Single-purpose vouchers (treatment until 1 January 2019)
  • Anti-avoidance

This note covers the issuing or redeeming coupons or vouchers under a business promotion scheme. The information provided in below in respect of face value and single purpose vouchers covers the VAT treatment until 1 January 2019 when the rules changed. See the Vouchers - VAT treatment from 1 January 2019 guidance note for information on the VAT treatment of face value and single purpose vouchers effective from 1 January 2019.

For information on other types of business promotion schemes see the following guidance notes:

  • giving supplies of goods and / or services away free of charge ― please see the Business gifts and samples and Business and staff entertainment guidance notes
  • providing free samples ― please see the Business gifts and samples guidance note
  • providing cash back schemes or giving goods free of charge as customer rewards ― please see the Business promotion schemes ― cash backs and loyalty schemes guidance note

HMRC Notice 700/7 ; De Voil Indirect Tax Service V3.167 (subscription sensitive); VATA 1994, Sch 10A

Promotion schemes

Businesses generally receive monetary consideration in exchange for the goods / services provided. However, when a business offers a promotion scheme to its customers, it is possible that the customer will agree to do something in exchange for receiving rewards when it participates in a promotion scheme. The action undertaken by the customer could constitute non-monetary consideration and VAT could be due on the supply made by the business. The value of any non-monetary consideration will be equivalent of the amount the customer would have paid for the goods / services in question. In certain situations, the consideration may be deemed to be the cost value of the goods / services supplied.

The following transactions are not treated

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