DOES THE RECENT EU RULING ON VAT ON RETAIL VOUCHERS AS PART OF SALARY SACRIFICE EXAGGERATE THE IMPLICATIONS FOR UK BUSINESS
23 August 2010
The director-general Andrew Johnson, from the UK Gift Card & Voucher Association has published a clarification statement on the judgement on VAT on retail vouchers.
“Recent press coverage of the AstraZeneca judgement on VAT charges for retail vouchers as part of salary sacrifice schemes dramatically exaggerate the implications for
First, the UK HMRC has yet to issue a policy statement in relation to the European judgment that AstraZeneca must account for VAT when passing on retail vouchers to staff in salary sacrifice schemes.
Secondly, salary sacrifice in relation to retail vouchers accounts for less than three per cent of the
Finally, moving forward, the ultimate effect is that the cost on this is, in fact, neutralised at zero if the price paid for the voucher by the employee is the same as that paid by the employer because the judgement rules that companies running salary sacrifice schemes for retail vouchers have to account for VAT on the supply to the employee but, at the same time, are able to recover the VAT on the purchase.”
As we mentioned when we first brought you the news about this ruling, the IPP