Vouchers given away with newspapers

Associated Newspapers Ltd (“ANL”) ran a promotion giving away M&S vouchers to people who had purchased the Daily Mail and Sunday Mail over a period of time.

The Court of Appeal has agreed with conclusions reached by the Upper Tribunal in respect of the VAT treatment of the relevant vouchers.

It decided that ANL was entitled to recover input tax where it acquired the vouchers through intermediaries, as the cost of the vouchers was part of its general business overheads. Although ANL may have been giving the vouchers away for free of charge, this was in respect of a business activity and was not caught by the relevant deemed supply rules (which affect gifts of goods made by a business). Therefore, ANL was not obliged to account for output tax when it handed the voucher the people purchasing

In light of the above, if you or any of your clients operate a promotional scheme involving vouchers, the VAT position is rarely straightforward and should be considered carefully. Please call our helpline to discuss the best way forward.

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