phil_d

Looking for assistance on VAT treatment within customer loyalty scheme. VAT Notice 700/7 has some details, but is not comprehensive. Outline of scheme is thus:- 1) Sponsor company issues reward points to its customers on purchase of goods 2) Sponsor contracts with Third Party, who provides and administers exclusive reward portal 3) Customers exchange accrued points via portal for assorted reward goods 4) Reward goods are provided directly to customer by Third Party operator (therefore supply and Output VAT liability) 5) Third Party recharges Sponsor for cost of reward goods Having read the relevant notice (700/7) and assorted ECJ/HMRC tribunals (especially C-55/09 Baxi Group), my understanding is that in the model scheme outlined above, the reward goods supply is between Third Party operator and end customer ("Collector"). Output VAT liability is therefore with Third Party operator. Additionally, the subsequent recharge from the Third Party operator to the Sponsor is Third Party Consideration (per Baxi C-55/09 / Notice 700/7 11.4), so Sponsor cannot reclaim Input VAT. Business Promotions 700/7 11.3 & 11.4 support the above, but also suggest "you should write to your usual HMRC point of contact for advice". This pre-supposes there IS such a point of contact, which is not clear in this case. Is anyone able to confirm understanding above is correct please, or point me to the relevant HMRC team that could offer further support? Many thanks.

If the supply is genuinely DDP, you as buyer have no role or visibility in the import process. That's the whole point of the term. The goods are fully customs cleared by the seller, with the subsequent supply to you being essentially a GB domestic supply. The seller needs to be GB VAT registered to sell DDP, as they would need to report Output VAT arising on their supply to you. From your point of view as purchaser, you should have an invoice from your supplier showing a) their GB VAT reg, and b) charging 20% VAT. You then treat this no differently to a purchase from a domestic vendor - Base Value in Box 7, Input VAT in Box 4. Hope that helps.