Gift voucher expiry dates, refunds and VAT

These rules apply across the UK.

Setting an expiry date

An expiry date is a term in a contract with a consumer, so it does not bind the customer if it is unfair. A term is unfair if it causes a significant imbalance in your and the customer's rights, to the customer's detriment, against the requirement of good faith. A court decides this on the facts.

Written terms must be in plain, intelligible and legible language. Hiding a restriction that matters to the customer's decision to buy, such as an expiry date, a minimum spend or a limit to one visit, can be a misleading omission. Information that is unclear, given too late or unlikely to be seen counts as omitted.

Trading Standards and the Competition and Markets Authority enforce the misleading omission rules, and the CMA can fine a business without a court order.

Voucher terms to show customers

Put your terms on the voucher and where customers buy it, in a form they see before they pay.

• State the expiry date, or that the voucher does not expire.
• Say whether a customer can spend the value over several visits.
• Say whether you give change.
• State any limit on what the voucher buys or where it can be used.
• Say what happens to the value if you stop trading.

When a customer wants their money back

A term that lets you keep a customer's money when you cancel may be unfair. So may a term that allows only a credit note when the law would let the customer choose a cash refund.

Goods bought with a voucher are covered by the Consumer Rights Act 2015 like any goods sold to a consumer. If they are faulty, the customer can reject them or ask for a repair, replacement or price reduction.

Closure and insolvency

Customers hold a claim against your business. Many administrators and buyers of a business choose to honour vouchers.

Christmas clubs and top-up schemes

If you hold customers' payments in an account for them to redeem later for goods or services, check whether you run a consumer savings scheme. The rules apply in three cases. The terms restrict when or for how long the customer can redeem. The terms give an incentive to redeem, or not redeem, at set times. Or you market the scheme to encourage that. A club that pays a bonus for spending in December meets the incentive test.

If the rules apply, you must protect customers' payments against your insolvency and give customers set information.

Which VAT rules fit your voucher

A voucher is single purpose when the VAT liability and place of supply of what it buys are known at issue. A UK cinema operator's voucher for a ticket, food or merchandise is single purpose, because all three are standard-rated. A voucher spendable on products at different VAT rates is multi-purpose.

If a single-purpose voucher is never used, you cannot adjust the VAT you accounted for on the sale unless you refund the customer. If a multi-purpose voucher is never used, there is no VAT to account for.

Where to get help

Ask your Trading Standards service for advice on your voucher terms before you sell vouchers. For VAT on vouchers, contact HMRC.