V16.883 Face value vouchers
Information Sheet 12/03, August 2003
This Information Sheet cancels and replaces VAT Information Sheet 8/03. It amends the Statement of Practice and provides clarification about the treatment of face value vouchers given away for no consideration, as implemented into UK law at VATA 1994 Sch 10A.
1 Introduction—what are face value vouchers?
Face value vouchers are vouchers, tokens or stamps with a cash value stated on them or recorded in them. 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 electronic top-up cards. They can be in either physical or electronic form.
2 New rules
New rules for the treatment of face value vouchers were introduced with effect from 13:30 on 9 April 2003. Prior to that date, VAT was only accounted for when the voucher was redeemed for goods or services and then usually only on the initial amount for which the voucher was sold.
3 Stock on hand
With the introduction of the new rules, businesses may have stock on hand. Face value vouchers issued prior to the introduction of the new rules can be treated under the old rules and continue to be sold free of VAT.
The amount of stock on hand may vary from business to business. However, if a business is unable to distinguish between vouchers issued prior to the introduction of the new rules and vouchers issued after the introduction