VAT and vouchers consultation

The Tax Faculty has responded to the VAT and vouchers consultation document issued by HMRC on 1 December 2017. The response is available to download as ICAEWREP 24/18.

The purpose of the consultation was to give businesses the opportunity to assist in deciding how the new voucher rules can be written into UK law, drawing attention to any issues this will present and to see whether greater clarity is required in some areas.

  1. Our major points were as follows:We are concerned that it will not always be clear to those redeeming vouchers whether they are redeeming a single purpose voucher (SPV) or a multi-purpose voucher (MPV). Consequently, there is a risk of double taxation where a voucher is treated as an SPV on purchase and an MPV on redemption. There is a similar risk of non-taxation where a voucher is treated as an MPV on purchase and an SPV on redemption.
  2. It will therefore be crucial to correctly identify whether a voucher is treated as a SPV or MPV at the time of purchase and for this treatment to be capable of confirmation by the eventual redeemer.
  3. We are concerned that output VAT may be accounted for on a greater value when redeeming an MPV than the total consideration received by the supplier for the underlying supply of the redeemed goods or services.
  • I agree with the concerns over determining whether a voucher is single purpose or multi purpose. This is a confusing for even the existing UK VAT law. Take for example I tunes vouchers, which we buy and sell in the distribution chain. I believe these are single purpose as they are for one type of product - electronic services - all standard rated. However, Apple and some of the supply chain seem to treat these as multi-purpose, and other distributors as single purpose. Which should they be?