Retail Vouchers - Accounting Treatment ?

Mr_Grind

Hey,
I'm looking for help.

Retail vouchers:
Voucher Sold - No Vat
Voucher Redeemed - Sales Vat on redeemed voucher.

This creates a difference in the vouchers sold & vouchers redeemed.

What is the correct accounting treatment?

y/e 2013
Vouchers Sold 60,000
Vouchers Redeemed 20,000

Is the correct treatment to create a future liability?
Are there any potential vat issues in writing off future un-redeemed vouchers?

Thanks in advance

douglastubbs

Might be worth reviewing the guidance as this is an area that has different
treatments depending upon type of service
http://www.revenue.ie/en/tax/vat/guide/vat-chargeable.html#section18

That aside, would agree with treatment you are proposing. Regarding the write off, there would be no VAT element based upon what you described. There has been no service provided if the vouchers have not been redeemed. Hope this helps

Alan Shore

If you are the store that issues the voucher for redemption in your store then you should credit a voucher liability (Con) a/c with the total.

When it is redeemed you account for the VAT on the sale.

If vouchers are not redeemed then there is no VAT as you have not had a supply. Only applies to vouchers issued by the store for redemption in the store.

Mr_Grind

Thank you.
The vat treatment on vouchers seems to be pretty straight forward.
Vat is charged on redemption.

When is the sale of the voucher recognised as income in the accounts?
Is it correct to defer the sale and create a liability until the voucher is redeemed.

A certain % of vouchers will never be redeemed.
I presume I will need to review the outstanding voucher liability each year.

i.e. vouchers > 18 months will be included in sales

dbran

Presumably you would also write off a proportion of this liability to profit and loss and thus book the income for Income tax/CT purposes as per your accounting policy?

Tommy Max

if customer vouchers or deposits expire after say 18 months and their account is then closed, is any forfeited balance reported as turnover?


should vat be charged on this unredeemed voucher or deposit which is to be booked as income? it appears not by what has been said previously. so it effectively becomes income that no vat is charged on? is that correct?

Is there anything the revenue have on this to confirm?