A new client of mine runs a cafe and has a loyalty card scheme
Question- the cards are entered as a form of income- but is it taxable with it technically a freebie- not sure whether I should be paying the Vat over on this or not
It would depend on how the card works. It sounds similar to a voucher
If it a free issue discount card, that entitles the holder with a store discount, then only the discounted purchase is recorded for sales, and VAT, as normal when it is made
If the card is a top up card that is redeemable at the store with discounted purchases, then the receipt of the top up should be posted to creditor account. It only moves to a sale, and VAT account when the card is used to purchase something.
There are a few other situations that might apply but I have stuck to the most common.
I would treat this like a discount voucher, That gives a gift of a cup of coffee for no consideration. You may need to/ want to show it as a nil value sale but it will not attract VAT
