Rules on vouchers have changed from 1 January 2019. The pre-1 January 2019 rules were complex and made a distinction in VAT treatment between credit, retail and ‘other’ vouchers. From 1 January 2019, there are only single and multiple purpose vouchers.
Single purpose vouchers are those where the goods or services that are redeemed for the voucher have a single VAT liability and where the place of supply of the underlying goods or services is known.
Multiple purpose vouchers are any vouchers that don’t meet the definition of single purpose. i.e. the vouchers can be redeemed for goods or services of different VAT liabilities or the place of supply is unknown at the time of issue.
Single purpose vouchers from 1 January 2019 – VAT must be accounted for on the issue and each subsequent transfer of the vouchers, but not on final redemption (when the goods/services are provided to the consumer). Where the voucher is issued by one person and redeemed by another, there is a deemed supply of the goods/services to the issuer. The issuer can reclaim the VAT on the goods/services, subject to normal recovery rules and a supporting invoice from the redeemer.
Multiple purpose vouchers from 1 January 2019 – VAT is only accounted for on the final redemption of the voucher. There is no supply on the issue or each subsequent transfer of the voucher.
Further information and guidance can be found at: https://www.gov.uk/guidance/find-out-about-changes-to-vat-legislation-on-face-value-vouchers-vat-information-sheet-0918
