VAT & Vouchers – An Update

Written by yasiradnan94
21 November 2018

Find out about the changes due from January 2019 on the three different types of vouchers and how it could effect your business.

A voucher is a piece of paper (or electronic document) that can be used to pay for particular goods or services or that allows you to pay less than the usual price for them. Vouchers issued by a business that will also redeem them are retail vouchers and these can be of three types.

  1. Experience vouchers – no face value but the bearer is entitled to redeem for a specific service
  2. Single purpose face value vouchers – can be redeemed for only one type of good/service and are subject to one rate of VAT
  3. Multi-purpose face value vouchers – can be redeemed for any type of goods or services subject to different rates of VAT

For the first 2 types above, VAT must be accounted for when the voucher is issued, not when it is redeemed. This remains the case even if the voucher is never redeemed and there is no provision for adjusting VAT if not redeemed before the expiry date.

The definition of a single purpose face value voucher (SPFVV) will change from 1st January 2019. The definition of an SPFVV will be where, at the time of issue, both the liability and place of supply are known. HMRC guidance can be found here.

For multi-purpose face value vouchers the VAT is due on redemption as it unknown what the voucher will be redeemed on at the time of issue. The treatment of these vouchers is unchanged.

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