VAT on voucher sale?

I am helping to set up a group buying site (VAT registered), but am having difficulty figuring out the VAT issue. With regard to group buying sites such as groupon, livingsocial etc, who actually pays for the VAT?

As a customer, when one buys a discounted voucher for £20 on something of a £100 value, one pays £20 and when redeeming, does not pay any more.

Therefore, if the merchant agreed to sell the product / service at a discounted rate of £20, and £10 goes to the group selling site, does the merchant pay the VAT on the £20 or on the amount actually earned; £10, or is the VAT owed to HMRC split between the merchant and the group selling site?

Or, is the voucher considered a gift certificate without VAT? Who is responsible for the VAT?

Hopefully someone knows the answer to this as seems to be a very complicated issue.

Many thanks in advance.

Comments

I have took on one of these

Carolynne | | Permalink

I have took on one of these cases last year.

The group taking the funds from the customer, usually send out a statement each month, showing how much they have taken from the customer and how much commission they are taking from this, and the amount left belongs to the company providing the servcies which is paid over usually once or twice a month into their bank account.

In my view, the sale portion only that is received by the company providing the services is a gross of VAT sale amount and not the full amount originally taken, as the group taking all the funds in, pays VAT and declares sales at their end on the other part they retain.

Hope this makes sense.

Caspar

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