When suppliers issue vouchers which can be redeemed later against their supplies, different VAT rules apply in largely similar conditions. For example, vouchers which can only be exchanged against supplies attracting one rate of VAT will have a tax point when the vouchers are issued. Vouchers which can be exchanged against supplies attracting differing rates of VAT will have a tax point when the vouchers are redeemed and the rate of VAT is known.
There can also be complexities concerning the value of vouchers for VAT purposes, how purchases and supplies should be disclosed by resellers of vouchers and the exact nature of supplies when a third party issues vouchers to be redeemed against the supplies of another business.
The government will address some of these complexities in ‘Finance Bill 2018-19’, legislating changes with effect from 1 January 2019 to ensure that, when customers pay with vouchers, businesses account for the same amount of VAT as when other means of payment are used, aligning the UK with similar changes being made across the rest of the EU.
A consultation paper will be published on 1 December 2017.
The proposed changes are targeted at retailers and other businesses involved in issuing, purchasing or selling vouchers.