Voucher Schemes For Employees and VAT


Firms that offer vouchers to employees in exchange for salary sacrifices are liable to a VAT charge, following a recent decision of the European Court of Justice (ECJ).
It involved AstraZeneca, which had given employees retail vouchers in exchange for salary sacrifices. AstraZeneca wished to recover the VAT element of the cost of the vouchers but argued that no payment of output VAT was due when the vouchers were supplied to staff.
The ECJ ruled that the vouchers represented a taxable supply (i.e. the payment for them was the sacrificed salary). This meant that AstraZeneca was liable to pay output VAT on the value of the salary foregone.
Firms using vouchers (or other salary-sacrifice arrangements that involve a potentially taxable supply) should review their accounting arrangements in the light of this decision. HM Revenue and Customs may well use the ruling to make claims going back several years.
AstraZeneca UK v HM Revenue and Customs.

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