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Gift Voucher Purchases - VAT treatment

Are purchases treated as zero rated or exempt?

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My client purchases gift vouchers to give to staff (eg Love2Shop).  The invoice that comes has £nil VAT on the gift voucher element.  Do these get recorded as exempt purchases or zero rated purchases (which determines if the purchase value is disclosed on the VAT return)?

I've read a lot of guidance around when the VAT is accounted for on the sale of the vouchers but can't find anything on how the purchaser treats them.

Thank you.

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By paul.benny
16th Jul 2019 13:04

The supplier invoice *should* specify whether the gift vouchers have been zero-rated or treated as exempt.

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By nynaeve2k
16th Jul 2019 14:59

That was one of the first things I looked at. They've not specified what drives the zero VAT charge - just that it's zero. There's no indication of VAT rate at all.

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By Vile Nortin Naipaan
16th Jul 2019 13:41

nynaeve2k wrote:

I've read a lot of guidance around when the VAT is accounted for on the sale of the vouchers but can't find anything on how the purchaser treats them.

Go figure. Purchasers (other than resellers, covered in the guidance) of gift cards tend not to be VAT registered.

A few points to assist you though:

1. Vouchers that can only be used to acquire goods or services that have a known VAT liability are treated as a supply of those underlying goods or services. However, where a business acquires such goods or services for the private use or enjoyment by its employees, it either shouldn't recover any input VAT or should make a corresponding deemed supply, dependent on the circumstances.

2. Vouchers that can be used to acquire goods and/or services where the VAT liability cannot be determined when the voucher is supplied is treated as if it is a supply of another form of money. There is no supply of goods or services. The supply is neither zero-rated nor exempt. It is outside the scope.

3. There does not exist, on this planet, any fucher who gives a rat's @r5e what goes in box 7 of the VAT return, other than, it seems, the OP.

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Replying to Vile Nortin Naipaan:
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By nynaeve2k
16th Jul 2019 15:02

Outside scope seems to fit. It's a purchase by the business for gifts to employees, so treated as a cash transaction from what you say above.

It is relatively small but I also know first hand how pedantic some VAT inspectors can be and so prefer to get things set up properly (or at least show effort too).

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