B2B sales offers & the law/tax
Discussion
Hi, just wondering if anyone here can point me in the right direction...
If your company sold B2B software and services and you wanted to start emailing contacts sales offers where does the law stand? I.E. if you said 'buy £10K worth of the software and we'll give you a free plasma TV' then is this acceptable as you are giving an individual the gift rather than the company?
Is there a guideline to such things and legal/tax implications?
All help appreciated.
If your company sold B2B software and services and you wanted to start emailing contacts sales offers where does the law stand? I.E. if you said 'buy £10K worth of the software and we'll give you a free plasma TV' then is this acceptable as you are giving an individual the gift rather than the company?
Is there a guideline to such things and legal/tax implications?
All help appreciated.
Surely the £10,000 they pay you covers the sale of the software and the "gift" of the hardware too. There is no major tax or accounting problem arising. Many businesses offer "gifts" as part of their overall sales strategy - even the humble "Buy One Get One Free" is a "gift" offer of sorts. If you chose not to accept payment for the goods you give away as part of the promotion, that is a commercial decision by your business.
Where the tax authorities might get shirty is if the "gift" is out of proprtion to the core sale - like buy a packet of salt and get a free beefburger. That was tried once upon a time when the VAT treatment of salt sales was different to the VAT treatment of hot take-away sales. The VAT people did not like this ploy and therefore changed the VAT regulations to ensure that no VAT benefits accrued to a business trying it on. They are still wary of a business offering a gift as part of a package of goods and services where the VAT treatment of the gift might be different to the VAT treatment of the core good or item being sold (the current fad for free CDs and DVDs with magazines and newspapers is one area they are looking at carefully.
>> Edited by Eric Mc on Wednesday 9th November 14:37
Where the tax authorities might get shirty is if the "gift" is out of proprtion to the core sale - like buy a packet of salt and get a free beefburger. That was tried once upon a time when the VAT treatment of salt sales was different to the VAT treatment of hot take-away sales. The VAT people did not like this ploy and therefore changed the VAT regulations to ensure that no VAT benefits accrued to a business trying it on. They are still wary of a business offering a gift as part of a package of goods and services where the VAT treatment of the gift might be different to the VAT treatment of the core good or item being sold (the current fad for free CDs and DVDs with magazines and newspapers is one area they are looking at carefully.
>> Edited by Eric Mc on Wednesday 9th November 14:37
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