VAT on gift cards/vouchers

[last of the summer wine]

Hi,
Can anyone confirm if I've understood this right please.

A director purchases £50 non-cash store gift cards/vouchers as gifts for staff. They are single purpose, i.e. from a clothing store where everything would be subject to VAT as opposed to say Tesco where you could buy both VAT and non VAT items. I've read that with single purpose gift cards VAT is paid (included?) at the point of sale (i.e. when the director purchased them?) and not when they are redeemed by the recipient. So, does that mean that the £50 cost is inclusive of VAT and that VAT can therefore be reclaimed? (Receipt bears the store's VAT number but shows total only, no VAT element).
Many thanks.

 

[DontAsk]

When I bought gift cards (from a clothing store) there was no VAT on the purchase. I believe this is always the case. The fact that the receipt includes the vendors VAT number is largely irrelevant. If there were VAT, it would be shown.

The cards act much like cash for the staff and they will pay VAT (on goods that attract VAT) when they use the card.

If the card purchase had VAT added, then it would effectively be paid twice.

Where did you read...?

 

[last of the summer wine]

Hi DontAsk,

I basically Googled "VAT on gift vouchers" and came up with an accountants' website where it said that with single purpose gift cards VAT is paid at point of sale, not when the card voucher is redeemed, so I took that to mean that VAT was included in the price of the voucher when it was purchased?

(I did wonder about any VAT amount not being shown but a previous accountant of ours said that if something would normally be subject to VAT, providing you had the company's VAT number you could claim the VAT back even if the VAT amount was not itemised).

 

[HFE Signs]

When you buy them at £50 does your receipt show any vat?

 

[bovine]

VAT on vouchers is complicated by single purpose or multi purpose. My understanding is its only single purpose if everything that could be purchased using it is vatable AND only at one location (place of supply). Most retail vouchers are I believe multi purpose vouchers.

Always refer to your vat receipt - if you dont have a vat receipt dont claim back vat.

 

[Sil_14]

I sell gift vouchers and the VAT is included at the point of sale, that's how I set it up on my POS system. When the card is redeemed, it is done against the gift card already paid so there shouldn't be a second sales transaction...

 

[last of the summer wine]

When you buy them at £50 does your receipt show any vat?

No!

 

[bovine]

But that depends on if it’s single purpose or multi. You may be able to claim it’s single, but only if you satisfy the criteria above. It’s a specific tax ruling.

 

[last of the summer wine]

VAT on vouchers is complicated by single purpose or multi purpose. My understanding is its only single purpose if everything that could be purchased using it is vatable AND only at one location (place of supply). Most retail vouchers are I believe multi purpose vouchers.

Always refer to your vat receipt - if you dont have a vat receipt dont claim back vat.

That was how I interpreted it but the vouchers were from a clothing store and the wording was that they could be used at that store or its associated stores (all clothing). There was no vat itemised on the receipt so I think I'll put them through at 0%.

Thanks to everyone who took the time to help.

 

[last of the summer wine]

But that depends on if it’s single purpose or multi. You may be able to claim it’s single, but only if you satisfy the criteria above. It’s a specific tax ruling.

I think they are single purpose (clothing only store) but as there was no vat shown on receipt I think I'll put them through without.

Many thanks.

 

[bovine]

Sorry, that was responding to an earlier one, but I hadn’t hit post reply, lol.

But being a clothing store there may still be different rated vat items. Kids clothes for example.

 

[last of the summer wine]

Sorry, that was responding to an earlier one, but I hadn’t hit post reply, lol.

But being a clothing store there may still be different rated vat items. Kids clothes for example.

Yes, I think you are right - it's since occurred to me that the store in question does actually have a kids department.

Thanks again, I appreciate all the help.

 

[HFE Signs]

No!

I think that is your answer then

 

[last of the summer wine]

I think that is your answer then

Yes, but as I mentioned in an earlier reply, a previous accountant of ours said that if an item would *normally* be subject to vat, providing you had the company’s vat number, you could claim. Hence my question about whether the gift cards would have been sold inclusive of vat.

 

[HFE Signs]

Yes, but as I mentioned in an earlier reply, a previous accountant of ours said that if an item would *normally* be subject to vat, providing you had the company’s vat number, you could claim. Hence my question about whether the gift cards would have been sold inclusive of vat.

So you ask the seller if there is any vat included in the price you paid. Basically it comes down to whether or not you have paid any vat when you purchased them.

 

[Paul Kelly ICHYB]

I believe Gift Cards & Vouchers are treated as cash, so their 'purchase' is not VATable (like swapping £20 for 2x £10).

The purchases made with these cards (goods) could be taxed.

 

[last of the summer wine]

So you ask the seller if there is any vat included in the price you paid. Basically it comes down to whether or not you have paid any vat when you purchased them.

If the situation ever arises where I know for certain it can only be a single purchase one, then I will. As to whether you've paid vat on purchase, some supermarket till receipts for example often do not make any mention of vat, even though you know for sure that the goods are vatable, they just show the total price.

My director sometimes works away on week long contracts and his working lunches usuallly consist of meal deals, so not only do you have to work out whether or not the chocolate brownie has vat on it, you also then have the fun and games of apportioning the vat allowing for the discount. He's usually up against it as it is so there's no way he could queue at customer services each time to ask for a vat receipt.

It would make life easier if stores were obliged to show the actual vat element on all receipts. After all, they must surely know how much vat they are actually adding!

 

[HFE Signs]

If the situation ever arises where I know for certain it can only be a single purchase one, then I will. As to whether you've paid vat on purchase, some supermarket till receipts for example often do not make any mention of vat, even though you know for sure that the goods are vatable, they just show the total price.

My director sometimes works away on week long contracts and his working lunches usuallly consist of meal deals, so not only do you have to work out whether or not the chocolate brownie has vat on it, you also then have the fun and games of apportioning the vat allowing for the discount. He's usually up against it as it is so there's no way he could queue at customer services each time to ask for a vat receipt.

It would make life easier if stores were obliged to show the actual vat element on all receipts. After all, they must surely know how much vat they are actually adding!

I totally agree - we just go by the rule if the vat is shown on the receipt we claim it, if not we don't. On balance for us, it really isn't worth the man hours finding out. I appreciate your dilemma though.

 

[Paul Kelly ICHYB]

some supermarket till receipts for example often do not make any mention of vat,

Which ones?

I thought that there was a legal obligation to show VAT, however, for certain businesses e.g. supermarkets, they do not need to show a full breakdown, just a summary.

 

[last of the summer wine]

Which ones?

I thought that there was a legal obligation to show VAT, however, for certain businesses e.g. supermarkets, they do not need to show a full breakdown, just a summary.

Sainsbury's, Tesco, WH Smith - more often than not just the final price, no vat amount. It seems to depend on the individual stores but I've bought stationery from Tesco before now and had to queue at customer services to ask for a vat receipt. They are usually happy to do it but it would make life easier if you didn't have to ask in the first place.

 

[last of the summer wine]

I totally agree - we just go by the rule if the vat is shown on the receipt we claim it, if not we don't. On balance for us, it really isn't worth the man hours finding out. I appreciate your dilemma though.

Fine if it's just the odd one but doesn't it annoy you to be paying more vat than you might have to?

I think perhaps a little email to our accountant, if only to firm up what our previous one told me.

 

[DontAsk]

Which ones?

I thought that there was a legal obligation to show VAT, however, for certain businesses e.g. supermarkets, they do not need to show a full breakdown, just a summary.

https://www.gov.uk/guidance/record-keeping-for-vat-notice-70021#vat-invoices "As a retailer, you may assume that no VAT invoice is required unless your customer asks for one. "

 

[HFE Signs]

Fine if it's just the odd one but doesn't it annoy you to be paying more vat than you might have to?

I think perhaps a little email to our accountant, if only to firm up what our previous one told me.

I guess it really comes down to the amount involved, if its just a couple of hundred quid a year then its no big deal, if it's thousands then it needs to be sorted out.

 

[DontAsk]

I think they are single purpose (clothing only store) but as there was no vat shown on receipt I think I'll put them through without.

"Clothing" stores very often sell other items too. There was no VAT.

 

[last of the summer wine]

https://www.gov.uk/guidance/record-keeping-for-vat-notice-70021#vat-invoices "As a retailer, you may assume that no VAT invoice is required unless your customer asks for one. "

Yes, I accepted that would be the case where supermarkets are concerned as their customers are mostly private individuals who wouldn't be concerned with vat, but as some supermarkets do show the vat, it would be nice if it was standardised.

 

[last of the summer wine]

"Clothing" stores very often sell other items too. There was no VAT.

Yep, someone mentioning kids clothes reminded me that the store in question does have a kids section.

 

[last of the summer wine]

Thanks to everyone who has taken the time to help. No VAT it is

 

[Paul Kelly ICHYB]

As a retailer, you may assume that no VAT invoice is required unless your customer asks for one. "

Correct, but VAT has to be shown on the (simple?) receipt.

 

[Karimbo]

I would regard single purpose vouchers are those that have very strict critera on what it can be used for. Phone top up bouchers where it can only be used for top ups. Or Energy pre-pay fobs where you put credit on a fob that can only be used to buy energy (5% vat I beleive).

I dont think a store brand gift card can be regarded as a single purpose voucher.

The retailer will be again this. They will have to pay VAT on the sale of the gift card - they probably know from exsperience that 30% of giftcards go unredeemed. So they would rather pay the VAT on redemption than pay the VAT on the sale of gift card.

So they will always want to class it as a multi purpose gift card. And that is correct IMHO. ANy high street store gift card is a multi purpose one as it can be used to be a wide variety of goods, some may be VATable, some not