Business promotion schemes ― vouchers ― VAT treatment from 1 January 2019

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 ― vouchers ― VAT treatment from 1 January 2019
  • Background
  • UK VAT treatment
  • What is the definition of a voucher?
  • Consideration
  • Retail schemes
  • Invoices

This guidance note deals with the VAT treatment of vouchers with effect from 1 January 2019. See the Business promotion schemes ― coupons and vouchers guidance note for more information on the VAT treatment of vouchers before this date.

For information on other business promotion schemes, see the Business promotion schemes ― coupons and vouchers and Business promotion schemes ― cash backs and loyalty schemes guidance notes.

Background

The EU Commission issued a proposal for Council Directive (COM (2012) 206) on the VAT treatment of vouchers. A copy of the relevant proposal can be accessed via the following link:

Click here to view pdf

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

A press release  was also issued by the EU commission regarding the new Directive.

The Commission has also issued the VAT rules on vouchers approved by Council  press release.

The new Directive  has now been enacted and is according to the Commission intended to reduce the risk of mismatches in national tax rules leading to double taxation, non-taxation or other undesirable consequences. This can happen where a voucher is issued in one EU member state and used in another, and particularly where vouchers are traded. A summary of the changes announced is provided below.

The consultation and amendments to the VAT treatment follow a significant number of cases involving payment using vouchers which have been referred to the CJEU.

Argos Distributors (C-288/94); Elida Gibbs (C-317/94); Kuwait Petroleum (C-48/97); Astra Zeneca (C-40/09); Lebara (C-520/10)

A summary of the main changes implemented by the Commission is below.

The term ‘voucher’ means an instrument where there is an obligation to accept it as consideration or part consideration for a supply of goods or services and where either the goods or services to

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