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HMRC internal manual

VAT Valuation Manual

Special valuation provisions: supplies by employers to employees - Paragraph 10, Schedule 6, VATA 1994

Paragraph 10 of Schedule 6 to the VATA 1994 provides:

10-(1) This paragraph applies to a supply of goods or services, whether or not for a consideration, which is made by an employer and consists of -

(a) The provision in the course of catering of food or beverages to his employees, or

(b) The provision of accommodation for his employees in a hotel, inn, boarding house or similar establishment.

(2) The value of a supply to which this paragraph applies shall be taken to be nil unless the supply is for a consideration consisting wholly or partly of money, and in that case its value shall be determined without regard to any consideration other than money.

The effect of this provision is to value supplies of catering and accommodation to employees by employers solely by reference to any monetary consideration given. Once any monetary consideration has been identified, the “normal valuation rule” contained in of the VAT Act 1994 section 19(2) should be applied. If you have been unable to identify a payment as consideration after consulting VAT Supply and Consideration VATSC, the policy team with overall responsibility for this area of policy is VAT Supply.