The above brief deals with changes to the treatment of certain supplies made by employers under salary sacrifice arrangements following the Court of Justice of the European Union (CJEU) Judgment in Case C-40/09.

Astra Zeneca operated a flexible remuneration package scheme under which employees could opt to take part of their remuneration in the form of goods and/or services rather than as salary. The case before the CJEU concerned the correct VAT treatment of high street shopping vouchers provided to employees as one of the options of the scheme.

The Court found that the provision of vouchers amounted to a supply of services affected for consideration. As a consequence, whilst Astra Zeneca was able to recover VAT incurred on acquiring the vouchers, output tax was due on the consideration received from its employees.

Although this case was concerned with the supply of vouchers to employees, it is HMRC's view that the principles considered by the Court are of general application and will apply to other supplies of goods and services to employees.More information is available from http://www.hmrc.gov.uk/briefs/vat/brief2811.htm