VAT on Vouchers?

by **samamac** on Thu Jan 26, 2012 3:40 pm

I wonder if someone could kindly help me out with the following.

The business that I work for, which is VAT registered, has received a voucher from a parts supplier that we use, which we can obviously use as payment or part-payment towards goods that we purchase from them.

In order to process this on our accounting software (Sage) I thought I would process it as though it were a credit note, but I wasn't sure if I would have to apportion a VAT element to the transaction or not?

Any ideas?

Many thanks in advance.

by **Generix** on Thu Jan 26, 2012 4:48 pm

Is it a discount voucher (e.g. £10 / 10% off if you spend £1000000), or is it a face value voucher (i.e. £100 voucher which can be used to buy goods)?

by **samamac** on Fri Jan 27, 2012 1:51 pm

Many thanks for your reply - it's a face value voucher.

by **Generix** on Fri Jan 27, 2012 5:31 pm

samamac wrote:I wonder if someone could kindly help me out with the following.

The business that I work for, which is VAT registered, has received a voucher from a parts supplier that we use, which we can obviously use as payment or part-payment towards goods that we purchase from them.

In order to process this on our accounting software (Sage) I thought I would process it as though it were a credit note, but I wasn't sure if I would have to apportion a VAT element to the transaction or not?

Any ideas?

Many thanks in advance.

My thinking is you shouldn't even include the voucher in your financial system until a payment is made. When the payment is made the best bet it to treat it the reduced cash settledment as a discount to the net amount on the purchase. The VAT should remain the same (as per the invoice you receive). If you can't overwrite the VAT then just fudge it somehow so you have the full input VAT credit in your input VAT account and the net amount of the invoice less the voucher in your p/l.

Hope that makes sense.

by **samamac** on Fri Jan 27, 2012 5:45 pm

It does - many thanks for your help.

by **cheeky charlie** on Wed Feb 01, 2012 2:33 pm

There's a whole host of info on HMRC's website about business promotion schemes and Face Value Vouchers ("FVV") like this, but I wouldn't go reading through all of it. :roll:

The upshot is that the tax treatment of face value vouchers depends on whether you are redeeming it from the same person who issued it (retailer vouchers) or some other type of FVV. Given that it is a supplier discount from one of your suppliers, I'll assume that it is a retailer voucher.

The tax treatment of the FVV is the responsibility of the supplier when the voucher is redeemed. Effectively, the supplier will treat this as a form of discount to you for your purchases. The normal rules for discounts then apply with VAT being due on the discounted amount.

The supplier should account for the VAT in their systems, reflecting the FVV as a discount and giving you a tax receipt or invoice showing the discounted NET value of the goods with VAT then calculated at the applicable rate on top.

This receipt or invoice should then be no different from any others that you have and you should be able to post it straight to your system without any further messing around.

I hope this helps
C

by **Generix** on Wed Feb 01, 2012 4:06 pm

cheeky charlie wrote:This receipt or invoice should then be no different from any others that you have and you should be able to post it straight to your system without any further messing around.

Except that cash paid out won't match the invoiced amount. Therefore imo you should record the invoice net amount less the voucher so that both your P/L and cash/bank all tie up.