Business gifts and samples

By Tolley

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

  • Business gifts and samples
  • What are not usually treated as business gifts?
  • What are treated as business gifts?
  • When is VAT due on gifts?
  • Can VAT be recovered on samples?

This guidance note provides an overview of the VAT treatment of supplies of business gifts and samples. A gift of business assets is treated as a supply of goods for VAT purposes which is liable to VAT at the relevant rate unless it comes within one of the exceptions mentioned in ‘What are not usually treated as business gifts?’ below when different VAT rules will most likely apply.

VATA 1994, Sch 4, para 5; VATA 1994, Sch 6, para 6; HMRC Notice 700/7 ; 2006/112/EC, Article 16 ; De Voil Indirect Tax Service V3.211, V7.430
What are not usually treated as business gifts?

Businesses that are involved in providing ‘gifts’ in the following situations may not come within the scope of the business gift rules explained in this guidance note and they should refer to the relevant guidance note for more information on the relevant VAT treatment.

VATA 1994, Sch 4, paras 5(1), 9; FA 2007, s 99(3); EMI Group plc v HMRC ECJ Case (C-581/08 ); Finanzamt Burgdorf v Fischer ECJ Case (C-322/99 ), [2001] STC 1356
  • there is no supply (and no VAT liability arises) unless the donor (or any of his ‘predecessors‘) has or will become entitled to credit for the all or part of the input tax on the supply, acquisition or importation of those goods or of anything comprised in them or a VAT refund on the supply or importation of those goods (or anything comprised in them) under the VAT refund rules applicable to persons established in other EU member states or the EC 13th Directive ― see the Overseas VAT refunds guidance note for more information

    A person is the ‘predecessor’ of the donor where the donor acquired the

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