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Using friends perk account to buy stock

Client wants to use a friends employee perk benefit to bulk buy stock

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I have a client (Ltd Company, VAT registered) who regularly purchases a widget (standard-rated), works with it and then sells onto a customer at a mark-up.

She has since told me that she can now buy these widgets through her friend, who has one of these employee perk accounts through their job. Like a RewardGateway or such, with shop discounts. The way it would work is she pays, say, £50 for £60 of credit at Amazon, which can then be used to buy these widgets.

The discount is worth quite a lot to her, but it does not feel right to me, namely:

  • Buying the widget through her friend, even though she uses her own bank card, paperwork won't be in her name, but in her friends
  • Tracking presumably the gift card she is essentially purchasing
  • Losing the VAT through the fact it's a gift card, which I think is not necessarily single purpose, as the widget is being bought from Amazon meaning that despite the saving, the VAT is not recoverable as it's lost at the point of purchasing the gift card
  • Her friend most probably breaching her perk and risking getting found out given the volumes

I asked her whether she could bulk buy, or whether she could identify the company providing the benefit, but I don't think so.

It doesn't taste right to me at all, but I'm keen to see if there are any thoughts. The only other idea was whether her friend bought and sold the widgets, maybe registered for VAT, but again probably the friend breaching her terms and it again just seems to stink as an idea.

Thanks

D

Replies (10)

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Psycho
By Wilson Philips
30th Jul 2020 20:12

I can’t put my finger on it (mainly because I don’t know what the relevant terms and conditions are) but I imagine that there would be a breach of something. I suspect, though, that it is the friend who would have more to worry about.

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Replying to Wilson Philips:
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By dfens
30th Jul 2020 20:36

Yep, although if her friend is OK with the risk of her buying widgets all the time, I don't necessarily think that's my issue.

I'm also thinking there must be a VAT issue there, but again, I'm not 100% sure.. I'm trying to dissuade her and hoping I can find and fire something concrete at her to make her agree with me!

Thanks (1)
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By Mr_awol
30th Jul 2020 23:21

Don’t know if maybe the pre paid cards etc were a bad example. But when I’ve had access to stuff like that (ie rewardgateway for B&Q, Argos, etc) it’s been a case of ‘buying’ £100 worth of gift card for £93

So I then go to B&Q and buy a hundred widgets at £1 each - and get a normal till receipt (or of trade account, invoice in my name etc)

If your client accounted for it as £93 cash drawn and £100 of privately, you’d never have noticed. Because you know, however, I’m not sure if you should insist she doesn’t get tax relief on the ‘discount’.

If it’s something else, where the invoice is in the friend’s name, could your client sign themselves up to perkbox, etc, and get the same rewards directly?

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Replying to Mr_awol:
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By Anonymous.
31st Jul 2020 00:59

Mr_awol wrote:

Because you know, however, I’m not sure if you should insist she doesn’t get tax relief on the ‘discount’.

I'm sure. The client has, in your example, £93 of expenditure and most definitely not £100.

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Replying to Anonymous.:
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By Mr_awol
31st Jul 2020 14:07

Anonymous. wrote:

Mr_awol wrote:

Because you know, however, I’m not sure if you should insist she doesn’t get tax relief on the ‘discount’.

I'm sure. The client has, in your example, £93 of expenditure and most definitely not £100.

I agree.

As I said, however, in many cases (where the payment isn't made directly from bank) we wouldn't know. Same as we wouldn't know if they'd paid full price and got cashback via Quidco, etc. Normally the amounts involved are so small it doesn't really matter in the grand scheme of things.

I left it open to the OP to assess whether they should restrict tax relief to the amount spent, on the basis that they clearly DO know.

We are assuming that this is going to be a lot of money but I imagine there will be some sort of fair use policy and the client's mate is likely to find their discount has all been used up quite quickly.

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RLI
By lionofludesch
31st Jul 2020 07:12

I thought widgets were zero rated.

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Replying to lionofludesch:
Quack
By Constantly Confused
31st Jul 2020 08:01

lionofludesch wrote:

I thought widgets were zero rated.

Only if they aren't partially or entirely covered in chocolate or a similar substance.

Oh, unless they go hard when you leave them in the sun.

Thanks (3)
Replying to Constantly Confused:
Routemaster image
By tom123
31st Jul 2020 08:36

Why am I thinking of buckets and the Aswan dam here..

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By paul.benny
31st Jul 2020 07:48

The way the schemes you mention work is that the employer pays the provider a small fee - typically £5-10 a year. The provider offers a number of benefits
- affiliate cashback (similar to TopCashback and Quidco
- discount codes
- sale of gift cards at below face value (typically 5%; larger for some higher margin stores). I don't think you can get the anything like 16% discount at amazon anywhere.

The provider I have access to does not appear to prohibit purchase of huge values of gift card but their terms say they can terminate a user account for any reason.

If your client is buying in sufficient volume for the saving to be worthwhile, it will attract attention - which may put the friend's account at risk.

I suggest the client may be better with an alternative supplier - going directly to the manufacturer/importer, sourcing from China via AliExpress

Thanks (2)
Slim
By Slim
31st Jul 2020 11:05

If there are discounts to be had maybe she can negotiate her own?

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