Business promotion schemes ― cashbacks, linked goods concession and multi-save

Produced by a Tolley Value Added Tax expert

Value Added Tax

Guidance

This guidance note provides an overview of the VAT treatment of cashbacks, linked goods concession and multi-save promotions.

Businesses involved in other types of promotion schemes should see the Business promotion schemes ― overview guidance note for more information.

For more detailed commentary, see De Voil Indirect Tax Service V3.158.

What is the VAT treatment of cashbacks?

According to HMRC, ‘cashbacks’ are payments made by the manufacturer either directly or via a recovery agency, to a customer of a wholesaler or retailer. These can also be referred to as discount schemes, volume bonuses, etc. Payments are often made to trade customers as a reward for the volume of purchases made and payments to customers are normally made in respect of specific product promotions. These payments are made outside of the normal supply chain so the business cannot issue credit notes to reflect the reduction in the value of the original supply, so special VAT rules apply to these types of arrangements. The current VAT treatment is as a result of

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