Value Added Tax

Business promotion schemes ― vouchers

Produced by Tolley
  • 22 Nov 2021 07:02

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

  • Business promotion schemes ― vouchers
  • What is a voucher?
  • What is the issue, transfer or redemption of a voucher?
  • Issue of a voucher
  • Transfer of a voucher
  • Redemption of a voucher
  • What is the consideration?
  • Single-purpose vouchers
  • Place of supply
  • VAT treatment of SPVs
  • More...

Business promotion schemes ― vouchers

This guidance note deals with the VAT treatment of vouchers that have been issued on or after 1 January 2019.

For information on other business promotion schemes, see the Business promotion schemes ― overview guidance note.

For more detailed commentary, see De Voil Indirect Tax Service V3.167.

What is a voucher?

According to HMRC, vouchers will be defined as an instrument, regardless of whether it is in a physical or electronic form, that meets all of the following conditions:

  1. ‘either a physical or electronic instrument

  2. that carries an entitlement to be accepted as consideration for the provision of goods or services

  3. where either or both of the goods or services for which it may be accepted, and the persons under an obligation to accept it as consideration for those goods or services, are limited and are stated on or in it

  4. which is transferable by gift’

The term ‘limited’ means that an instrument is only applicable to either specified products or specified suppliers, as opposed to money which can normally be used to purchase anything anywhere.

Typical examples of vouchers are gift cards and vouchers, pay as you go phone cards, and book tokens.

HMRC states that the following are not regarded as vouchers for the purposes of these provisions:

  1. ‘discount vouchers and similar

  2. an instrument functioning as a ticket

  3. postage stamps

  4. electronic money, credit cards, prepaid cash cards, currency cards or similar mechanisms for making payments

  5. keys or codes giving access to software (which may be purchased using a voucher)

  6. vouchers

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