V6.169 Business promotion schemes—liability of supplies
Business promotion schemes are commonplace but they vary considerably in form and can present significant VAT challenges. This paragraph considers some of the key VAT issues that can arise from the operation of typical business promotion schemes.
Business promotions—gifts
Many businesses will give gifts to customers and staff. Gifts are broadly to be understood as goods or services which are given away with no consideration (monetary or otherwise) given in return. For circumstances where there is non-monetary consideration, see 'Business promotions—non-monetary consideration' below. In Notice 700/7, para 2.2, HMRC describes a business gift as
'A business gift is a gift of goods that is made in the course of promoting your business and for which you were entitled to reclaim the VAT you were charged on its purchase as input tax. By “gift” we mean a definite, voluntary and unconditional transfer of the goods for no consideration.'
Gifts of goods
It is normally necessary for there to be a link between supply of goods
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