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Do Employees pay VAT

If employees make a purchase from Employer do they pay the VAT

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If a company buys goods/products and one of the employees wants to purchase something for personal use, do they have to pay the VAT as well? I always thought they did as how can a company claim back VAT without charging the goods out with no VAT on it. I have been informed that as long as you deduct the money from the employee through the payroll, you only have to deduct the Net amount of the goods. Doesn't seem right to me.

Any advice on this would be welcome.

Replies (6)

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By paul.benny
21st Nov 2019 08:47

You're exactly right - whoever has informed you about payroll deductions is wrong.

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By DJKL
21st Nov 2019 08:56

Is this getting mixed up with staff discounts where items are offered to staff at a lower price and the discount roughly equates to what the vat would have been had they charged the full price?

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By spidersong
21st Nov 2019 09:13

If you were informed this over 8 years ago then depending on how the formalities of the payment were structured then whoever told you may have been right at that point.

However for the last 8 years they wouldn't have been right, salary sacrifice arrangements were 'clarified' back in 2012 so that unless the benefit is exempt in its own right VAT will be due.

If it wasn't a contractual salary sacrifice but a simple payroll deduction then they will have always been wrong as VAT has always been due on those (where the supply itself has a taxable nature).

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By Mabel
22nd Nov 2019 06:21

Thank you all, for confirming this for me, does anyone know of a link through to HMRC for this one. I searched everywhere and couldn't find it.

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By paul.benny
22nd Nov 2019 07:54

Try VAT700, paragraph 9.3

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By spidersong
22nd Nov 2019 11:01

And in addition to Paul's suggestion above here's the HMRC internal manual that gives explicit statements about amounts deducted through payroll:
https://www.gov.uk/hmrc-internal-manuals/vat-supply-and-consideration/va...
which says for its first line "Where deductions are made from salary for goods or services provided by an employer to their employees they are liable for VAT." Which should cover what you need.

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