Category: Tax Services

Most businesses ask this as a yes-or-no question, but UK VAT does not work that neatly. Whether a business can reclaim VAT on transaction fees depends on who received the service, what the transaction was for, and whether the cost links to taxable business activity rather than a passive investment or an exempt share sale.

How VAT on Deal Fees is Applied in Various Situations

Deal situation	Usual VAT outcome
A trading company issues new shares to raise funds for its taxable business	Often recoverable under the normal rules, because a new share issue is not a VAT supply in itself. If the issue supports economic activity, the related VAT can be input tax, subject to partial exemption if relevant.
A passive holding company buys shares to earn dividends or sell later for gain	Usually not recoverable. Pure shareholding for dividends or capital growth is treated as investment activity, not taxable business activity.
A holding company buys a subsidiary and supplies genuine management services for real consideration	Often recoverable, but only if the holding company is the recipient of the adviser services, carries on economic activity, and makes taxable supplies. Partial exemption can still reduce the claim.
An acquisition is a direct extension of an existing taxable trade	Often recoverable. Such as buying a competitor, a key supplier, a key customer, or a property-owning subsidiary from which the buyer intends to trade.
A business sells existing shares	Usually restricted or blocked, because the sale of existing shares is normally an exempt supply. If the share sale is only incidental to the wider business, there are special partial exemption rules rather than an automatic full block.
The target company incurs vendor due diligence costs	Recovery can be possible for the target if the target is the actual recipient of the services and they were received for its own business.
A deal aborts after fees have been incurred	Recovery can still be possible if there is genuine, objective evidence of an intention to make taxable supplies. Failed projects do not automatically destroy recovery.

How VAT Applies to Common Payment Processing Fees

VAT treatment can vary between payment providers and by the type of service supplied. While many financial services are VAT-exempt, technical or administrative payment-processing services do not automatically qualify for that exemption.

Businesses should therefore check the provider’s invoice, the contracting entity and the nature of each charge before treating transaction fees as recoverable input VAT.

Stripe

Stripe fees are not automatically VAT-exempt. Card-processing services can be subject to standard-rated VAT where the service is treated as taxable payment processing.

The exact VAT treatment can depend on which Stripe entity provides the service, whether the supply is made from the UK or cross-border, and the particular service being charged for. Different treatment may apply to services such as terminal hardware, platform fees, payouts or other additional features.

Where the supply is cross-border, businesses may also need to consider whether the reverse charge applies.

PayPal

Some core PayPal payment services may qualify for the VAT exemption that applies to certain financial services, particularly where the service involves the transfer or movement of funds.

However, this does not mean every PayPal charge is VAT-exempt. Additional merchant services, administrative charges and other ancillary services can have different VAT treatment.

Businesses should review the individual charge and supporting invoice rather than assuming all PayPal fees receive the same VAT treatment.

GoCardless

GoCardless generally charges standard-rated VAT on UK transaction fees. Since April 2020, its UK transaction fees have been treated as taxable supplies rather than VAT-exempt financial services.

Where VAT is correctly charged, a VAT-registered business may be able to reclaim it subject to the normal input tax recovery rules and the use of the service for taxable business activities.

Traditional Banks

Many core banking services are VAT-exempt under the financial services exemption. This commonly includes standard banking and payment services.

However, banks may also provide additional or ancillary services that are taxable. Charges for certain administrative, advisory or other non-financial services may therefore include VAT.

For VAT recovery on bank charges, businesses should check each charge individually to confirm whether VAT has actually been applied and whether it is recoverable under the normal input tax rules, rather than assuming every fee on a bank statement is VAT-exempt.

Why Payment Processing Fees Are Not Always VAT-Exempt

The VAT exemption for financial services does not automatically extend to every service involved in making or receiving a payment.

Following court decisions including Bookit and NEC, HMRC distinguishes between services that actually perform an exempt financial transaction and technical or administrative services that simply facilitate card payments. Card-handling and processing services that only enable a customer to make a payment can therefore be standard-rated at 20%.

The key point is that a transaction fee does not automatically contain reclaimable VAT. Businesses should check whether VAT has actually been charged, identify what service the fee relates to and confirm that the normal input tax recovery conditions are met before including it on a VAT return.

What Decides Whether to Reclaim VAT on Transaction Fees

Three questions usually decide the result. 

1. Was the fee incurred in taxable business activity?
2. Is there a direct and immediate link between that cost and taxable supplies? 
3. Is the business claiming the VAT actually the recipient of the service?

That is why labels like “legal fee”, “corporate finance fee” or “due diligence fee” do not settle the point on their own. The same type of cost can be recoverable in one structure and blocked in another, simply because the underlying activity is different.

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Importance of the Invoice Trail

A second point is often missed: the invoice trail matters. Whether the claimant contracted for the service, was invoiced, paid for it, and made use of it, while general VAT record rules also require valid VAT invoices and records that support the claim.

Using professional accounting services can also help ensure adviser invoices, payments and supporting records are captured consistently before the VAT return is prepared.

Partial Recovery for Mixed Activity

If a business has both taxable and exempt activity, it may only recover the taxable portion unless the de minimis rules help. The current de minimis limit is £625 per month on average and no more than half of the total input tax, with an in-period check and a year-end review.

Practical Takeaways

• Decide early on the recipient entity: Decide before the first engagement letter is signed which entity should receive the service, because attribution is based on actual or intended use when the purchase is received.
• Give the holding company a real taxable role: If a holding company is meant to recover VAT, give it a real taxable role. Genuine management services for more than nominal consideration are a strong starting point.
• Expect partial exemption with loans: If the structure also includes interest-bearing loans, expect partial exemption to enter the picture.
• Don’t ignore the year-end de minimis review: A claim that looks acceptable during the year can be clawed back later if the annual test fails.

Read: Court of Appeal ruling puts VAT on education grants under scrutiny 

How common deal structures are treated

Share acquisitions through a holding company

A holding company does not get recovery just because it owns subsidiaries. If it only holds shares, receives dividends and hopes for a later sale, that is investment activity, and the VAT on acquisition costs is normally not recoverable. 

The position improves where the holding company buys the subsidiary to make taxable management services for consideration. The acquisition costs of such a holding company are part of its general overheads, so the VAT can be deductible only if the holding company receives the adviser services and makes taxable supplies. 

A practical observation here is that vague plans do not help much. If the structure only contemplates charging the subsidiary “at some point later” or only if profits allow, that is weak; official case summaries and guidance both stress the need for genuine, priced services and real consideration. 

Acquisitions that strengthen an existing trade

Not every acquisition needs a separate management charge to support recovery. Share acquisition can sometimes be a direct, continuous and necessary extension of an existing taxable trade, such as buying a competitor, a key supplier, a key customer, or a property-owning subsidiary from which the buyer plans to trade. 

That is a useful point in real deals. If a trading business buys a company to reinforce its own trading operation, the fee can sometimes sit with the buyer’s existing taxable business rather than a standalone investment case. 

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Share Sales and VAT

A sale of existing shares is normally an exempt supply. That is why VAT on legal and advisory fees linked directly to a share disposal is usually a problem, and a wider commercial reason for the sale does not automatically fix it.

Immediate Transaction Matters

That last point matters. Selling shares to raise money for wider taxable trading does not by itself turn the disposal fees into recoverable VAT, because the immediate transaction still matters.

Restructuring Context

There is, though, an important nuance. Some disposals in a restructuring context may fall within economic activity where the disposal is a direct, permanent and necessary extension of the taxable business, but this is fact-sensitive and should never be assumed.

Standard Partial Exemption Method

If the business uses the standard partial exemption method and a share sale is merely incidental to the main business, the value of that share sale should be excluded from the standard method calculation. The VAT on the related costs is then dealt with using normal attribution rules rather than by simply including the deal in the denominator and accepting the result.

Special Method and Residual Costs

If the business uses a special method, certain residual costs on incidental share sales must be apportioned by use. Costs such as:

• Accountants
• Financial advisers
• Lawyers
• Advertising agencies
• Marketing consultants
• Listing and registration services
• Document preparation services

Share Sales Are Not TOGC

One other point saves confusion in practice: a share sale is not a TOGC. Where a limited company changes hands by way of a share transfer, the assets remain owned by the company, so there is no asset transfer to which TOGC rules apply.

Fundraising and VAT

A new share issue is treated differently from a sale of existing shares. The issue of new shares is not a supply for VAT purposes, and related VAT can be recoverable to the extent the issuer’s business generates taxable supplies.

Target-Side Fees

On the seller side, the target company’s own fees can sometimes be overlooked. Vendor due diligence and similar costs incurred by the target may be deductible where:

• The target is the recipient of the services
• The services were received for the target’s business

Aborted Deals

Aborted deals are not automatically lost causes either. If there was genuine objective evidence that the business intended to make taxable supplies, preparatory VAT can still be recoverable even where the project fails before those supplies are made.

A Must Read: Everything About VAT Return Deadlines in the UK

Check the Adviser’s VAT Status

Also check whether there is actually any VAT on the adviser bill in the first place.

• Pure advice, such as advice on capital raising or defending takeovers, is taxable
• A genuine intermediary service in a securities transaction can itself be exempt if it meets the exemption conditions

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How to improve the chances of recovery before the deal closes

The biggest practical point is timing. VAT attribution is based on how the service is used, or intended to be used, when the service is received, so sloppy structuring at the start of the deal is hard to repair later. 

In real transactions, the weak spot is often not the technical rule. It is the evidence pack: the engagement letter is in one company’s name, the invoice is sent to another, and the payment comes from a third. That makes it much harder to show who really bought and used the service. 

Document or step	Why it matters
Engagement letter in the right entity’s name	Helps show which business contracted for the service and was the recipient.
VAT invoice in that same entity’s name	A recoverable claim needs a valid VAT invoice and records that support it.
Payment trail	Official guidance on recipient status looks at who paid for the service as well as who contracted and who used it.
Board minutes, deal papers and business plan	These can provide objective evidence of intended taxable supplies, especially where the deal never completes or charges begin later.
Management services agreement with a real charging model	Helps show that services are genuine, for consideration, and more than nominal.
Actual management invoices after completion	Strong evidence that the structure reflected real taxable activity rather than a vague future intention.
Partial exemption workings	Essential where deal fees support both taxable and exempt activity, including share sales or exempt lending.
Six-year retention of VAT records	VAT records generally need to be kept for at least six years.

A final but important point is VAT grouping. Joining a VAT group does not automatically create recovery, and it does not turn passive investment activity into taxable business activity. 

Where claims usually break down

The most common failure point is assuming that “commercial purpose” is enough. It is not enough to say the deal helped the group overall; what matters is the VAT link between the cost and taxable outputs. 

Other problem areas come up again and again:

• Passive holding activity dressed up as a business activity. Receiving dividends and holding shares is not enough on its own. 
• Management services that are never properly priced or invoiced. A loose intention to charge later is weak evidence. 
• Assuming a later VAT group will rescue old acquisition VAT. It does not do that automatically. 
• Invoices and contracts sitting with the wrong entity. The claimant still needs to show it received, used and paid for the services. 
• Forgetting the share-sale rules in partial exemption. Incidental share sales have their own treatment under both standard and special methods. 
• Ignoring the possibility that the adviser’s own service was exempt. Pure advice is usually taxable, but some intermediary work in securities transactions can be exempt instead. 
• Missing the annual de minimis re-test. Recovery allowed during the year can still be reversed at year end. 

A smaller but still important trap is “stewardship” or group overhead costs. Some group audit, legal, regulatory, brand defence and bid defence costs may really belong to the group as a whole, even if the holding company receives the invoice for convenience. 

How Apex Accountants Can Help Reclaim VAT on Transaction Fees

At Apex Accountants, we keep this area practical. Our focus is not just on whether VAT looks reclaimable in principle but on whether the contract, invoice trail, management model and partial exemption position actually support the claim.

We help clients with:

• reviewing legal, due diligence, corporate finance and other transaction fees line by line
• checking which entity should contract for, receive and pay each adviser
• building evidence for management charges, intended taxable supplies and aborted deals
• calculating partial exemption, de minimis and pre-registration claims
• reviewing VAT grouping points before and after completion
• preparing clear support packs for internal sign-off and external review

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Conclusion

VAT recovery on deal fees is possible, but it is rarely automatic. The strongest claims usually involve one of two positions: the fee sits inside an existing taxable business, or the acquiring company is carrying on real taxable activity and can prove it with proper documents and real charges. 

Claims usually fail for the opposite reasons. The structure is really an investment; the fee links to an exempt share sale, the wrong entity received the service, or the paperwork does not match the story the business wants to tell. 

FAQs on VAT on Deal Fees

Can a holding company reclaim VAT on acquisition fees?

Yes, but not just because it is a holding company. Recovery normally depends on the company being the recipient of the adviser services, carrying on economic activity, and making taxable supplies such as genuine management services for consideration. 

What if the holding company only receives dividends?

That usually points the wrong way. Simply holding shares for dividends or a later capital gain as investment activity, not taxable business activity. 

Do management charges need to be real and priced?

Yes. The services need to be genuine, provided for consideration that is more than nominal, and not left as a vague future idea that may or may not be billed later. 

Does the invoice need to be in the claimant’s name?

In practice, yes, that is the safest position. Whether the claimant contracted for the service, was invoiced, paid for it and used it, and normal VAT rules also require valid VAT invoices and records to support the claim. 

Does joining a VAT group automatically fix the issue?

No. Joining a VAT group does not automatically create recovery and does not turn passive investment activity into taxable business activity. 

Can VAT on share sale fees be recovered?

Usually not in full, because the sale of existing shares is normally an exempt supply. If the share sale is only incidental to the wider business, special partial exemption rules may soften the effect, but that is not the same as an automatic full reclaim. 

Can a partly exempt business still recover all the VAT?

Sometimes. If the exempt input tax is no more than £625 per month on average and no more than half of the total input tax, the de minimis rules can allow full recovery, but the position must still be reviewed at year-end. 

Can the target company recover VAT on vendor due diligence?

It can if the target is the real recipient of the services and the services were received for the purposes of the target’s own business. 

What if the deal aborts?

A failed deal does not automatically kill the claim. Where there was genuine, objective evidence of an intention to make taxable supplies, preparatory VAT can still be recoverable even if the business never reaches the point of making those supplies. 

Can pre-registration VAT on deal fees be reclaimed?

Potentially, yes. For services, normally a six-month lookback before registration, while goods can go back four years, but only where the costs were bought for the taxable business that is now registered.

Vouchers (such as gift cards, book tokens or phone top-ups) are widely used by businesses to attract and retain customers, but the rules around VAT on vouchers can be complex. Since 1 January 2019, the UK has aligned its legislation with EU rules to clarify when VAT becomes due. Under these rules, a voucher, whether physical or digital, is treated as an instrument that can be accepted as payment for goods or services up to a specified face value. However, it is important to note that money-off coupons or discount vouchers are not treated as face-value vouchers for VAT purposes. 

The key to applying the correct treatment lies in understanding whether a voucher is classified as a single-purpose voucher (SPV) or a multi-purpose voucher (MPV), as each category determines when VAT must be accounted for and how it impacts your business.

Defining Vouchers and VAT Scope

What counts as a voucher? 

A voucher gives the holder a right to redeem it for identifiable goods or services up to its face value. For VAT, this includes gift cards or e-vouchers you pay for in advance and later exchange for specific products or services. It excludes things like “money off” coupons, loyalty points, debit cards or stored-value cards without a specified redemption item.

Face-value voucher (old law): 

Previously, UK law called vouchers “face-value vouchers,” defined as tokens or stamps entitling the bearer to goods or services of the value stated. Under current law, the focus is on when the underlying supply takes place.

VAT on Single-Purpose vs Multi-Purpose Vouchers

Value-added-tax law now classifies a voucher as either single-purpose (SPV) or multi-purpose (MPV):

VAT on Single-Purpose Voucher (SPV): 

At the time the voucher is issued, the place of supply and VAT rate of the underlying goods/services are known. In other words, an SPV is tied to a specific supply at a single VAT rate. 

For example, a gift card redeemable only for standard-rated books or a phone top-up card usable only for telecom services (if those services have one rate) would be SPVs. VAT is charged immediately when the voucher is sold (issued) and on each subsequent transfer of the voucher. This means the seller accounts for VAT on the voucher’s face value upfront. If the voucher is never redeemed, the VAT still stays due – the issuer cannot escape the tax by non-redemption.

For a simple worked example, if a business sells a £60 digital voucher that can only be used for a UK service subject to 20% VAT, it would be treated as an SPV. The VAT would be £10 (£60 ÷ 6) and would be accounted for when the voucher is sold. HMRC guidance confirms that qualifying electronic vouchers can also fall within the SPV rules. 

For businesses dealing with VAT on single-purpose voucher schemes, confirming the classification before issuing or transferring vouchers can help avoid incorrect VAT reporting and unexpected liabilities.

VAT on Multi-Purpose Voucher (MPV): 

If either the place of supply or VAT rate is unknown at issue, the voucher is multi-purpose. MPVs give the customer flexibility (e.g., a tourism pass or a voucher valid at many outlets with different VAT rates). Because the eventual use is uncertain, VAT is only due when the voucher is actually redeemed for specific goods or services. 

All prior sales or transfers of the MPV are not taxable supplies, and no VAT is charged or invoice issued until redemption. For example, a “city sightseeing pass” offering access to attractions (some exempt, some zero-rated, some standard-rated) was held by a tribunal to be an MPV, so VAT was only payable when the pass was used.

Using the same £60 digital voucher example, if it can instead be redeemed for goods with different VAT treatments, such as standard-rated and zero-rated products, it would be an MPV. No VAT would normally be due when the voucher is sold. VAT would instead be determined when the customer redeems it, based on the goods or services supplied.

Key takeaway: Do you know what the voucher will be used for when it is issued?

If yes, it is a Single Purpose Voucher (SPV), and VAT is due when the voucher is sold. If no, it is a Multi-Purpose Voucher (MPV), and VAT is due when the voucher is redeemed.

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When is VAT due?

For VAT on SPVs: 

VAT is due immediately when the voucher is sold (or any time it is transferred), because the VAT on the underlying supply can be determined up front. The issue or sale of the voucher is treated just like selling the actual goods or services. The seller charges VAT on the sale price of the voucher and remits it to HMRC. For example, if a £50 gift voucher for a shop’s standard-rated goods is sold, the seller accounts for £50 of VAT due at that point.

For VAT on MPVs: 

No VAT is due on the sale or transfer of the voucher itself. Instead, the VAT charge is postponed until redemption, when the actual goods/services are supplied. At redemption, the consideration is usually the face value (or last sale price) of the voucher. For example, a £50 tourism voucher (redeemable for various services) incurs VAT when the holder finally uses it to buy a museum ticket or ride a bus; the issuer (redeemer) then accounts for VAT on that £50.

Place of Supply Matters: 

For VAT, we look at where the underlying supply happens – not where the voucher was bought or sold. The HMRC guidance highlights that if a voucher can be used in multiple EU countries (or outside the UK), its place of supply can’t be known at issue, making it an MPV.

No VAT Invoice on MPVs Transfers: 

Since MPVs are not taxed until redemption, any sale or resale of an MPV is outside the scope of VAT – meaning no VAT invoice is issued by the intermediary. This also means businesses cannot claim input VAT on expenses used to buy MPVs that they later resell, because no VAT was charged on those transactions.

Examples and Case Law Related to VAT on Vouchers

• Gift Vouchers/Gift Cards: 

A gift card valid at one store (all items at one VAT rate) is typically an SPV – VAT at sale. A gift card valid at many stores or for various products/rates is an MPV – VAT at redemption.

• Prepaid Phone Cards: 

If only used for telecom services at a known rate, it’s an SPV (VAT when sold). If it also buys transport tickets or other services at different rates, it becomes an MPV.

• Tourist Pass (Go City Ltd): 

The Go City Ltd case (FTT Aug 2024) involved London attraction passes. The tribunal ruled these were multi-purpose vouchers because users could choose among attractions with different VAT treatments. Therefore, VAT was only due on redemption.

• Cross-Border Digital Vouchers (M‑GbR vs Finanzamt O): 

The EU’s Court of Justice (Apr 2024, C-68/23) decided on German video content vouchers (redeemable only in Germany but sold elsewhere). It held they were SPVs (use limited to one country), so VAT was due on each resale of the voucher. This highlights that even cross-border sales are taxed as SPVs if their actual use was fixed.

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Key Points for Businesses

• Classify correctly: 

Misclassifying an SPV as an MPV (or vice versa) can lead to under- or over-paying VAT. Always check what goods/services the voucher can buy and where they’ll be supplied.

• Tax point and accounting: 

For SPVs, account for VAT at sale; for MPVs, only at redemption. This affects invoices, bookkeeping and cash flow.

• VAT recovery: 

Only supplies that incur VAT allow the seller to reclaim input tax. Since MPV transfers are VAT-free, the seller cannot recover VAT on those transactions.

• Multi-country or multi-rate vouchers: 

If a voucher can be spent in different countries or on items with different VAT rates, it’s very likely an MPV. For example, vouchers accepted in several EU member states are MPVs because the place of supply was not known at issue.

• Review schemes regularly: 

The VAT rules on vouchers are complex and have evolved with recent cases. Businesses should review any voucher schemes (especially new ones) and seek expert advice if unsure.

How We Help Businesses Deal With VAT on Vouchers

The rules in Schedule 10B of the VAT Act 1994 determine how qualifying vouchers are treated for VAT purposes. If your business issues digital vouchers, gift cards or vouchers covering different products or locations, our VAT specialists can review the arrangement and help determine the correct SPV or MPV treatment before VAT returns are submitted. 

At Apex Accountants, we help businesses navigate VAT rules on vouchers and beyond. Our VAT specialists can:

• Advise on SPV vs MPV classification for your voucher schemes.
• Ensure you apply the correct VAT treatment and timing.
• Assist with invoicing and bookkeeping entries for voucher transactions.
• Review cross-border voucher sales and place-of-supply implications.
• Help recover VAT correctly and plan cash flow.

We provide VAT compliance and advisory services tailored to your business, including international and digital services VAT. Our team stays up-to-date on the latest legislation and cases, so you can focus on your business.

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Conclusion

Voucher schemes are a useful marketing tool, but the VAT rules are intricate. Since 2019, UK law has followed EU principles: single-purpose vouchers (known final supply) trigger VAT on issue, whereas multi-purpose vouchers (uncertain use) only incur VAT on redemption. Recent tribunal and CJEU cases reinforce these principles. To avoid errors, businesses should carefully assess their vouchers’ characteristics and get specialist guidance.

If you’re using or planning voucher-based promotions, speak to our VAT experts at Apex Accountants. We can clarify the rules, assess your setup, and ensure your VAT treatment is spot-on.

FAQs: VAT Treatment of Vouchers in the UK

1. How does VAT work on vouchers?

VAT depends on the type of voucher. Single-purpose vouchers are taxed when issued, since VAT treatment is already known. Multi-purpose vouchers are taxed only when redeemed because the final supply and VAT rate are not determined earlier.

2. Can you claim VAT back on a gift voucher?

It depends on the voucher type. For multi-purpose vouchers, no VAT is charged on purchase, so there is nothing to reclaim. For single-purpose vouchers, input VAT may be recoverable if the underlying expense qualifies under normal VAT rules.

3. Are vouchers tax exempt?

Vouchers are not automatically tax exempt. Their VAT treatment depends on how they are structured. Some transactions may be outside the scope of VAT initially, but VAT will usually apply either at issue or redemption, depending on the voucher type.

4. Are vouchers goods or services?

For VAT purposes, vouchers are not treated as goods or services. Instead, they represent a right to receive goods or services in the future. VAT is applied to the underlying supply, not to the voucher itself in most cases.

5. What is HMRC’s approach to VAT on gift vouchers?

HMRC classifies vouchers into single-purpose and multi-purpose categories. The key factor is whether the VAT rate and place of supply are known at issue. This classification determines when VAT must be accounted for under UK legislation.

6. Do digital gift vouchers follow the same VAT rules as physical vouchers?

Yes. Qualifying digital and electronic vouchers generally follow the same VAT rules as physical vouchers. Their treatment depends on whether they meet the conditions for a single-purpose voucher or multi-purpose voucher, rather than whether they are issued digitally or on paper.

7. Are gift vouchers VAT exempt or zero-rated?

Gift vouchers are usually neither exempt nor zero-rated. Their treatment depends on whether they are single-purpose or multi-purpose. VAT may be due at issue or redemption, rather than applying a specific exemption or zero rate.

8. How does VAT apply to gift vouchers for employees?

Employers usually cannot reclaim VAT on multi-purpose vouchers, since no VAT is charged at purchase. For single-purpose vouchers, recovery may be possible, but business gift rules may require output VAT if values exceed £50 per person annually.

9. What is a single-purpose voucher for VAT?

A single-purpose voucher is one where the place of supply and VAT rate are known when issued. VAT is charged at the point of sale and on each transfer, with no additional VAT due when it is redeemed.

10. What are multi-purpose vouchers for VAT?

Multi-purpose vouchers are those where the VAT rate or place of supply is unknown at issue. VAT is not charged when sold. Instead, VAT is accounted for when the voucher is redeemed for goods or services.

11. How is VAT applied to discounts and vouchers?

Where vouchers are used as payment, VAT is usually calculated on the amount actually paid or redeemed. If a voucher is sold at a discount, VAT is often based on the discounted value when goods or services are supplied.

12. What happens to VAT if a voucher is never redeemed?

For a single-purpose voucher, VAT is generally accounted for when the voucher is issued or transferred, so non-redemption does not normally remove the VAT already due. For a multi-purpose voucher, VAT is generally due only when it is redeemed, meaning an unused MPV would not normally trigger VAT on the underlying supply.