The following Value Added Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:
IP COMPLETION DAY: 11pm (GMT) on 31 December 2020 marked the end of the Brexit transition / implementation period entered into following the UK’s withdrawal from the EU. At this point in time, key transitional arrangements came to an end and significant changes began to take effect across the UK’s VAT and customs regime. This document contains guidance on subjects potentially impacted by these changes. Before continuing your research, see the Brexit — overview guidance note.
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 VAT treatment until 1 January 2019 when the rules changed. See the Vouchers ― VAT treatment from 1 January 2019 guidance note for information on the VAT treatment 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 VAT could 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
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