V16.877 Modernisation of face value vouchers
Information Sheet 3/03, April 2003
1 What is this about?
This information sheet gives details of the recent changes to the treatment of face value vouchers (FVV) introduced in the Budget.
2 What are face value vouchers?
FVV are vouchers, tokens or stamps which bear a cash value. They must be supplied for a consideration and carry a right to receive goods or services without the necessity for further payment, although further payment may be made. Examples include gift vouchers, telephone cards, book tokens, and postage stamps. The extra statutory concession which brought electronic versions of FVV in line with their tangible equivalents will be removed as the new rules will cover both electronic and tangible FVV.
3 What were the old rules?
Under the previous rules when an FVV was sold by the issuer, or by intermediate suppliers in the supply chain, they did not usually have to account for VAT at the time of the sale. The redeemer of the voucher only accounted for VAT when the FVV was exchanged for goods or services and then only on the sum received on its initial sale. This rule prevented double taxation which would have resulted if VAT had been accounted for both at the time of issue of the voucher and upon redemption of the voucher.
4 What are the changes to face value vouchers?
Subject to the provision outlined below, there will be no change to the current rule for businesses who both sell the FVV and take on the