Gift vouchers

tinajanine65

I would be grateful for some advice please. I am completing the books of a public house and have noticed that there are a few gift vouchers handed out i.e. £10.00 off next meal, free glass of wine, free starter etc. Do I just ignore these or should they be accounted for income or VAT purposes, the money off vouchers specifically. I am sure it is a simple answer but I would appreciate clarification. Thanks.

slackda

Could agruee that there should be a provision for the cost assoicated with the voucher,

based on Value of Vouchers given out x the probability of the vouchers being used before the expiration date..

other than that i wouldn't have thought there are any VAT implications untill the voucher is redeemed.

tinajanine65

The vouchers I have received within the books are vouchers already redeemed, so should they be added to income? as I am assuming the amount given as a gift would have been deducted at the till when the meal is paid for? or am I getting myself completely in a muddle!

slackda

aha,

Depends on how the vouchers were issued, were they sold or given out as promo material?

tinajanine65

They were given out as promo material

slackda

My thought would to record as follows: Example £100 meal with 10% discount voucher)

Entry 1
CR :-Sales £100.

DR :-Sales Control £100

Entry 2
DR : Cash £90

CR : Sales Control £90

Entry 3
DR : Promo Expense £10(Could be treated like a sales return)

CR: Sales Control £10

Arguablly if they have already been taken off the sales income figures that you have you could ignore as the bottom line would not be affected, but you could never see the true impact of the promo expense so i wouldn't do that.


Thats how i would treat it imo.

Any one else??

groundy

I think you are over complicating the matter. The amount received is sales simple. The only benefit of monitoring vouchers used would be for the benefit of the landlord and have little if any significance to VAT & Tax

slackda

Think you may have to account for for VAT :

2.2 Free discounts on goods or services
If you give a discount freely on goods or services you need only to charge VAT on the discounted amount.

top ^2.3 Free gifts or vouchers or coupons
The tax treatment is explained in paragraph 5.8.
5.8 Face value vouchers – Issued Free
If you give face value vouchers away free and your customer redeems them without making a further payment, then you must account for VAT on the goods or services supplied as explained in paragraph 2.1 for goods and paragraph 2.4 for services. If your customer makes a payment or provides non-monetary consideration then you should account for VAT on the total amount received by you.



top ^2.4 Free gifts of your own services
If you provide a service yourself to a customer free of charge, there is usually no supply and no output tax is due. Where you simply pay for services to be supplied direct to your customer the VAT shown on the invoice is not claimable by you as input tax although it may be claimable by your customer. Although VAT is usually due on free loans of business assets (see Notice 700 The VAT Guide) some free loan to your customers may be treated as outside the scope and no output tax due – see paragraph 6.9.

Where you incur tax in respect of providing free hospitality to non-employees the business entertainment provisions mean you are unable to deduct this (see Notice 700/65 Business Entertainment for further details). Examples of services where this might apply are hotel accommodation, tickets for a day at the races or similar events.

Monsoon

My gut feeling is

Sales £100 inc VAT - Credit.

Debit £90 cash or bank, and £10 promotional expenses.

But I'm not sure after reading Slackdas links. But then, my VAT exam is in November and i should get off here and carry on studying for my peronsal tax exam next week! Feel free to kick me off if you see me on here again today!

Bluewednesday

I read the VAT advice as that if you give it totally free you have to account for VAT but if the customer makes a part payment then you account for the VAT on the payment you receive.

wildgoose1uk

Surely it would be part of marketing expenses? All it seems to be is a ploy to get more business and it costs nothing other than a little lost profit which willhopefully have gained you a regular customer.

Not read the recent advice though.