SALARY SACRIFICE
ECJ confirms that employers must account for VAT due on salary-sacrifice retail vouchers
The European Court of Justice has recently ruled that employers must account for output tax on the supply of salary-sacrifice retail vouchers to employees.
It is believed that, although many employers recover VAT charged to them when they buy retail vouchers, there are likely to be a number of those that do not account for output tax on the provision of the retail voucher to the employee. Now that the ECJ has followed the Advocate General’s opinion, which was delivered in April, it is likely that HM Revenue & Customs will begin to assess employers for the output tax due.
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A final word
“Many employers were shocked at the AG’s opinion delivered in April but have waited until this judgement was released before looking at their own salary-sacrifice schemes. Now that this judgement confirms their fears, we recommend that they look at their salary-sacrifice arrangements as a matter of urgency. It is likely to cost them a substantial amount of money as HM Revenue & Customs is entitled to assess employers for any output tax due over the last four years.” - Steve Hodgetts, VAT partner at Baker Tilly.
Want to know more?
--> “Advisers issue warnings after AstraZeneca VAT voucher case”, by David Jetuah, Accountancy Age, 30 July 2010:
www.accountancyage.com/accountancyage/news/2267346/asvisers-issue-warnings
--> “Salary sacrifice retails voucher are now subject to VAT”, Smith & Williamson, 30 July 2010:
www.smith.williamson.co.uk/news/3453-salary-sacrifice-retails-voucher-are-now-subject-to-vat
--> “ECJ judgment clarifies VAT treatment of staff vouchers”, Deloitte, 29 July 2010:
www.deloitte.com/view/en_GB/uk/news/news-releases/4f02abd50fe1a210VgnVCM200000bb42f00aRCRD.htm