VAT Reclaim on Gift Card purchases. Experiences required.

[Ferdinand]

On the Discounts thread and off-forum we are having a debate about how to recover VAT on purchases made with a Gift Card (eg from an Employee Rewards scheme).

 

So, for example, if I put my £12k kitchen or £150 paint through a Wickes or B&Q Gift Card in order to save about £1200 or £15, what documentation do I have obtain and present at the end in order to get the VAT back from the HMRC under the DIY build scheme?

 

I will be asking HMRC for advice via the Helpline, but has anyone successfully completed this cycle? What did you do, and eere there any difficulties?

 

There are at least 2 different cases ... one is where VAT is charged on the purchase or top up of the Gift Card, and the other where it is charged at the time of Sale of Goods.

 

Homebuilding Mag had *this* article about VAT Reclaim in 2016 by  Accountant Andrew McDonald, which does not address this detailed point. Does anyone happen to know Andrew to invite him to comment on this thread?

 

Any experience or resources will be welcome. I hope to produce a small FAQ at the end.

 

Rgds

 

Ferdinand

 

Edited August 5, 2017 by Ferdinand

[Barney12]

http://www.ukgcva.co.uk/downloads/factsheets/fs_vat.pdf

 

Somewhat technical and aimed more at the provider. But might be worth getting their input?

http://www.ukgcva.co.uk/contact.html

 

Edited August 5, 2017 by Barney12

[PeterW]

13 minutes ago, Barney12 said:

http://www.ukgcva.co.uk/downloads/factsheets/fs_vat.pdf

 

Somewhat technical and aimed more at the provider. But might be worth getting their input?

http://www.ukgcva.co.uk/contact.html

 

 

Unfortunately its not that clear as the VAT rules depend on the type of card it is. Lebara vs HMRC is the case law on this and its a joy... Even the UKGCVA guidance isn't clear - they just use a replay of the VAT notice that I posted previously.

 

There is a legal requirement however for a retailer to produce a VAT invoice on demand - this is where the sticking point is I think for the Wickes/B&Q retailers is I expect

 

 

[Temp]

2 hours ago, Ferdinand said:

So, for example, if I put my £12k kitchen or £150 paint through a Wickes or B&Q Gift Card in order to save about £1200 or £15, what documentation do I have obtain and present at the end in order to get the VAT back from the HMRC under the DIY build scheme?

Why would it make a difference how you pay? Cash, credit card, Tesco club card points, shouldn't make a difference? As far as I know you just need a VAT Invoice.

 

When I purchased stuff at BnQ and other DIY stores I just asked the lady on the till for a VAT receipt. Usually they fished out a pad and hand wrote one. Sometimes they had to call for a manager to do it. They need your address to put on it.

 

I think HMRC accept ordinary till receipts without your address up to £30.  

[Temp]

25 minutes ago, PeterW said:

Unfortunately its not that clear as the VAT rules depend on the type of card it is. Lebara vs HMRC is the case law on this and its a joy... Even the UKGCVA guidance isn't clear - they just use a replay of the VAT notice that I posted previously.

 

Ah ok so it might matter if the card isn't in your name? To reclaim VAT it must be you that makes the purchase. I suppose that could make a difference.

 

Who gets the warranty if the card isn't in your name?

[PeterW]

It's nothing to do with names, it's when the transaction is recognised for VAT purposes. 

 

A retailer selling their own gift vouchers can treat them as exempt from VAT until the point of redemption as they are in effect a prepayment in accounting terms - up until they are actually assigned to a sales transaction they do not attract the appropriate VAT element. 

 

These intermediaries who sell the voucher at less than face value are deemed to be entering into a transaction with both the supplier (in this case B&Q who provide the cards) and the end purchaser. There are therefore appropriate elements of input and output tax to be considered.

 

What the card issuer may well be doing is reassigning VAT to the correct accounts when they are recognising the gift card revenue however the thing perplexing me is how can they differentiate between the types of gift card ..??

 

This probably needs HMRC advice ..!

[Temp]

Reading this...

https://www.taxinsider.co.uk/690-How_Vouchers_Affect_the_Amount_of_VAT_Due.html

It says..

 

Quote

When a customer redeems a face value voucher, for example a gift voucher, the transaction is treated as though the face value voucher was cash, and VAT is due on the full value of the transaction. If you can show the voucher had been sold at a discounted amount, VAT is due on the discounted value, rather than the face value of the voucher.

 

7 hours ago, Ferdinand said:

So, for example, if I put my £12k kitchen or £150 paint through a Wickes or B&Q Gift Card in order to save about £1200 or £15, what documentation do I have obtain and present at the end in order to get the VAT back from the HMRC under the DIY build scheme?

 

So the risk is that you are charged the full VAT but the store only passes VAT on the discounted rate to the HMRC. The HMRC then refuse your reclaim saying you "over paid the VAT in error".  On that basis it looks like the safest route would be to get the store to only charge you VAT on the discounted value of the gift card but good luck getting them to do that. I bet they only ever charge VAT at the standard rate. Any time someone presented a discounted card they would have to change the VAT rate calculated by the till. 

 

Edited August 5, 2017 by Temp

[Jeremy Harris]

As another single data point, we were given a load of garden vouchers, which we used to buy landscaping stuff.  This was all VAT reclaim eligible, as it was a part of the approved landscaping scheme.  We didn't have any problem in getting a VAT receipt for turf, etc that we purchased with these vouchers, and HMRC paid out for the VAT OK.

 

On a secondary point, I also had loads of B&Q till receipts (all from a "pensioners Wednesday discount".........).  I stapled each till receipt to a sheet of A4 paper annotated with my name and address, plus any extra info, like ineligible items that had been removed from the total.  All these till receipts were entered on the second section of the reclaim form, the one for receipts where the VAT was not shown separately, IIRC. 

 

BTW, I made up a spreadsheet to mimic the HMRC form, which was OK'd by HMRC.  Anyone can download a free copy from my website, here: http://www.mayfly.eu/wp-content/uploads/2017/01/VAT Claim Form 431 - Blank.xls

[PeterW]

@Temp just be careful as that is from 2011 and the rules changed in 2013. 

 

Face value vouchers are treated differently to other types of retailer vouchers - the source is the problem. 

 

I've asked a friend who is a tax consultant to see if he knows the answer.