The following Value Added Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:
This note covers the issuing or redeeming coupons or vouchers under a business promotion scheme. The information provided in below in respect of face value and single purpose vouchers covers the VATtreatment until 1 January 2019 when the rules changed. See the Vouchers ― VATtreatment from 1 January 2019 guidance note for information on the VATtreatment of face value and single purpose vouchers effective from 1 January 2019.
For information on other types of business promotion schemes see the following guidance notes:
giving supplies of goods and / or services away free of charge ― please see the Business gifts and samples and Business and staff entertainment guidance notes
providing free samples ― please see the Business gifts and samples guidance note
providing cash back schemes or giving goods free of charge as customer rewards ― please see the Cash backs and loyalty schemes guidance note
HMRC Notice 700/7; De Voil Indirect Tax Service V3.167; VATA 1994, Sch 10A
Businesses generally receive monetary consideration in exchange for the goods / services provided. However, when a business offers a promotion scheme to its customers, it is possible that the customer will agree to do something in exchange for receiving rewards when it participates in a promotion scheme. The action undertaken by the customer could constitute non-monetary consideration and VATcould be due on the supply made by the business. The value of any non-monetary consideration will be equivalent of the amount the customer would have paid for the goods / services in question. In certain situations, the consideration may be deemed to be the cost value of the goods / services supplied.
HMRC historically provided the following examples of transactions are not treated as non-monetary consideration but this list has been removed from the December 2019 version of Notice 700/7 so is provided for reference purposes only:
buy one and get one free (BOGOF)
offering a discount voucher which can be redeemed against
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