My client is a retailer who sells gift vouchers to the general public to be used only in one of its 2 stores. Goods at the stores are subject to a mixture of VAT rates ie not just standard rated items.
At the moment, VAT is being accounted for when the voucher is issued and also when the voucher is redeemed. Therefore, when the VAT return is prepared, the VAT on the redemption of the vouchers is identified from the report and deducted from the output VAT - which just leaves the VAT on the original sale of the vouchers being accounted for on the return. Some of the vouchers will of course never be redeemed, so in my mind VAT is being accounted for when no supply has actually been made.
My instinct is that because the vouchers are only redeemable in the client's stores, the VAT should only be accounted for at the point of redemption. Is that correct and if so, is the sale of the voucher exempt, zero rated or something else?
Will the answer differ if the vouchers are given away?
I have tried to find the answer to this on the HMRC web site but have ended up getting myself very confused!!!!
I would be really grateful for your help with this.
Sue
the latest guidance is here: vatadvice.org/vouchers-change-of-vat-rules/ - even Google brought up my article! The link to the HMRC Brief 12/12 is also on the page. The key is to distinguish between SPV (Single Purpose Vouchers) and MPV (Multi-Purpose Vouchers).
regards
Les
