Value Added Tax

Business promotion schemes ― manufacturer promotions

Produced by Tolley
  • 22 Jun 2022 08:32

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

  • Business promotion schemes ― manufacturer promotions
  • Manufacturer trade promotion schemes
  • Vouchers and reward schemes
  • Trade orders over a period of time
  • What happens if reward goods are used for non-business purposes?
  • What happens if the points or vouchers are swapped?
  • What happens where retrospective discounts are offered?
  • What are the consequences of giving goods to employees?
  • Manufacturer consumer promotions
  • Retail promotions
  • More...

Business promotion schemes ― manufacturer promotions

This guidance note provides an overview of the business promotion schemes that can be used by manufacturer’s to generate sales.

For other types of promotion schemes, see the Business promotion schemes ― overview guidance note.

Manufacturer trade promotion schemes

Manufacturers often have trade promotion schemes in operation in order to encourage customers to purchase more of their premium products. Examples of the typical schemes that could be used by manufactures are provided below.

Vouchers and reward schemes

The manufacturer who is offering vouchers or reward schemes will typically either:

  1. issue a voucher or other proof of purchase when the customer buys the premium goods which can be redeemed by the customer against a future purchase. As the customer can obtain goods without payment when the voucher is redeemed, the redemption goods are treated as a gift and the VAT treatment described in the Supply and Consideration ― business gifts and samples (deemed supply) guidance note should be applied

  2. provide a trade reward scheme to customers who purchase a minimum amount in a single trade order. If the customer meets the minimum order requirements, they will receive goods free of charge as part of that order. The cost of the reward goods are deemed to be included in the overall cost of the goods supplied in that order, so VAT only needs to be accounted for on the consideration received (ie no additional VAT needs to be accounted for on the reward goods)

VAT Notice

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