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Company credit card cashback

Company credit card cashback

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Hello,

A company is using a Santander 'Business Banking Cash Back Card' and receiving a couple of hundred pounds per month as a 'Cashback awarded' based on 1% of the previous months spend:

 'A purchase is a purchase of goods or services using the Credit Card or Credit Card Number, or where the amount of the purchase is debited directly to the Credit Card account'.

I assume that is 'other income' for accounting purposes subject to CT - correct?

Can anyone advise of the VAT status of the amount received?

 Thanks in advance.

 

Replies (7)

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By Accountant A
21st Aug 2019 14:57

Definitely taxable. EDIT: Is there an argument for looking line by line and reducing each item of spend by 1%?? Can't believe it would be worth the effort. Makes no difference unless the purchase is an asset or disallowable expenditure.

No idea about the VAT:

https://www.gov.uk/guidance/business-promotions-and-vat-notice-7007

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By Jholm
21st Aug 2019 15:13

Discounts received? P.S. I don't do accounts so don't fire me if wrong (tax boy here).

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Hallerud at Easter
By DJKL
21st Aug 2019 15:22

Purchase discounts received would likely be where I would post it, presuming most purchases are goods for resale.

If the rebates are £200 a month at 1% that implies purchases at circa £20,000 per month, quite a chunk on card; at that sort of level I would be getting nervous re staff abuse,paying by card is easy and there likely is no or limited secondary controls .I have a business credit card and am always mindful how vulnerable it makes the business to non authorised purchases, but at least with us we actually do not spent that much in total in a year outwith bank interest, bank repayments, dividends and tax, so with us it would be hard to hide any dodgy transactions)

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Replying to DJKL:
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By CWservices6064
21st Aug 2019 17:45

Thanks,

It's a two director/shareholder plumbing business and they perform the work so no other workers using the cards.

The spend covers their monthly main supplier accounts to but them some extra days for cashflow.

Any comment on the VAT position?

Thanks (0)
Replying to DJKL:
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By CWservices6064
21st Aug 2019 17:46

Thanks,

It's a two director/shareholder plumbing business and they perform the work so no other workers using the cards.

The spend covers their monthly main supplier accounts to buy them some extra days for cashflow.

Any comment on the VAT position?

Thanks (0)
Replying to DJKL:
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By meadowsaw227
22nd Aug 2019 11:20

We have a client who regularly clocks up £40k -£50k on their company credit card(s).
Makes for interesting reading/sorting out.

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By Sam Beedle
03rd Oct 2019 12:14

Did you ever receive the answer to this?

I have the same issue. Our Barclaycard has just started offering cash back and we need to figure out whether the income is VATable or not?

I've scooted through the businsess promotion notice but it doesn't really touch on credit card cash back from what I can see.

I'm reluctant to put this through as a purchase discount as Barclaycard have nothing to do with who we are actually paying for goods/service.

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