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Gift Vouchers - Trivial Benefit

Non-Cash Vouchers Readily Exchangeable for Cash

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'Tis the season where a lot of clients ask what they can do for their employees at Christmas.

 

I have always been reluctant to recommend they give employees gift vouchers from big brands. While the guidance says a non-cash voucher of less than £50 is trivial, I worry that in the modern world, it is very easy in reality to exchange non-cash voucher for cash.

 

The actual legislation (ITEPA 2003, S75) states:

"In this Chapter “cash voucher” means a voucher, stamp or similar document capable of being exchanged for a sum of money which is—

(a) greater than,

(b) equal to, or

(c) not substantially less than,

the expense incurred by the person at whose cost the voucher, stamp or similar document is provided."

 

The line "capable of being exchanged" is what I wonder about. Is this in a legal sense or the economic reality? There are several websites where you can sell gift vouchers for "not substantially less than" the face value. Even if this is against the T&Cs of the voucher, there is no way big brands will police this. 

 

Am I being overly paranoid on this? Would HMRC be Scrooge about such small amounts? Should I tell clients to buy Amazon vouchers (for their employess) to their heart's content?

Replies (8)

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By David Ex
19th Nov 2021 16:07

Davemaverick wrote:

The line "capable of being exchanged" is what I wonder about.

Always assumed it meant exchanged with the issuer for cash.

As you suggest, you could trade any vouchers with the bloke down the pub in most cases and at some discount.

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By Tax Dragon
19th Nov 2021 16:25

Do you think there is any analogy with s62(3)(b)?* If so, HMRC's argument in this thread https://www.accountingweb.co.uk/any-answers/bik-valuation-for-luxury-goods might be a clue as to where Scrooge is working this Christmas.

*(I haven't looked up the case that Tax Dragon referred to in that thread - which may [or by definition may not] inform an answer to that question.)

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Replying to Tax Dragon:
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By Davemaverick
19th Nov 2021 17:05

It certainly has parallels. While there is a specific section referring to vouchers, the risk is HMRC could point to more general provision, such as S62. Maybe I am right to be cautious.

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By Paul Crowley
19th Nov 2021 20:55

https://www.accountingweb.co.uk/tax/personal-tax/any-answers-answered-re...

Tim says yes to gift vouchers from John Lewis as trivial benefits as the second question discussed
Other stores are available

https://www.accountingweb.co.uk/any-answers/reclaiming-vat-on-trivial-be...

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By Paul Crowley
19th Nov 2021 21:39

I have yet to hear of or read of any HMRC challenge to trivial benefits.

That includes Tim's use of the brand name vouchers
He has been public with it on several videos in the public domain
Any gift voucher could be turned into cash
Buy a gift and return it, or sell on Ebay the voucher itself

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Replying to Paul Crowley:
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By Hugo Fair
19th Nov 2021 22:14

"Any gift voucher could be turned into cash"
... True, but as David says above, I too "always assumed that the line ('capable of being exchanged') meant exchanged with the issuer for cash" - hence the three quanta of "a sum of money" (which it would otherwise be unnecessary to state).

Conveniently the old 'trick', available at M&S and some other brands, (whereby you purchase clothes with your voucher and immediately join the 'returns' queue for a cash rebate) has been changed - by the simple expedient of any rebate having to be to the same account as on the purchase invoice (which in this case would result in another gift voucher).

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Replying to Hugo Fair:
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By Paul Crowley
19th Nov 2021 22:27

I do not spend any gift cards I get
Mrs claims them all
M & S food hall for treats usually

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By andrew1211
24th Nov 2021 11:33

Buy them without any issues at all

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