Welcome New Executive Board Newly Elected Members Existing Members • • • • • • • • • Gareth Batten – M&S Tim Ward – John Lewis Stuart Lawrence – B&Q Arun Glendinning – CashStar Tony Rich - Halfords Kevin Lake - Countdown Siobhan Moore – Locke Lord Wayne Harrington – Edenred Steve Bradbery - SVS Names in purple are Issuer Members, Black are Service Members Thanks to Out Going Exec Members: • Denise Porter – TreatMe • Bill Alexander – Red Letter Days • Diane Jackson – CPI Card Group • John Bohan – M&S The New Membership Year Andrew Johnson UKGCVA Current Status Total Membership: 78 39 Issuer Members 39 Service Members In 2006 – 56 members total In 2011 – 72 members total At the last meeting members agreed that membership criteria was centred on ‘gifting’ either person to person or company gifting. Scope of membership to be revisited each year by the exec to take into account industry advances 2014 Plan: Update Objective Progress To Date • UKGCVA becomes Thought Leader, Trend • Developer & Voice of the • Industry Learning Opportunities • • • Overseas Partnerships • • Networking • • Next Steps from Member Feedback Scope of PR extended through Rostrum More ‘thought leader’ articles Continued research, e.g. B2B Project • • Hub of Innovation website has not been progressed Dedicated workshops difficult to organise due to conflicts of interest Guest speakers at meetings or panel discussions • Relationships with IMA and PIF continue UKGCVA is fully supportive of the opening of an Irish Association • Social events not well attended Meetings very well attended • • • • • • Build on good PR Investigate further research opportunities Proactive with speaking opportunities Develop meetings over the next year to continue to add value rather than developing further events Potential for meetings to be sponsored to secure speakers and be clear who the sponsor is – to be discussed by new exec Work to launch the Irish Association either as stand alone or as partnership association with UKGCVA Continue relationship with PIF and IMA No further alliances planned as per member feedback Develop meetings further No further social events 2014 Plan: Update Objective Progress To Date Next Steps from Member Feedback Formalising Best Practice & Industry Guidelines • • Project groups meet as necessary No recording of formal best practice has taken place • Research & Market Analysis • • EY data continues to be developed Research project for this year is focused on B2B PR using adhoc, informal research for PR purposes • • • • Organise project groups as necessary – VAT & Emoney Plan for recording best practice EY contract up for renewal early 2013; opportunities for further enhancement B2B research is supported by 24 members, value of further research to be discussed Negative Media • Retailer administration continue to give rise to negative PR • Interviews and articles always come back to breakage! Answering the Questions: • Breakage is a reality, there is no benefit in ignoring it! • The true figure is difficult to get; it varies store to store; retailers v leisure etc. – 6% is an average • Do we need to make a more accurate assessment with members? • We talk about the positives – spending within 3 to 6 months, additional spend so retailers do want gift cards and vouchers to be spent • These questions are not going away! Regulators • Liaison with regulators has become increasingly important • Association partners with PWC for VAT and Locke Lord for Emoney • Also direct relationships with relevant personnel at HM Treasury, FSA and the EU • Working groups to be established for VAT and EMD, potential for these groups to meet with regulators (EMD 2011 met with HMT and FSA on several occasions) • Your own internal relations with regulators should be encouraged • Some member companies may employ dedicated people to liaise with government departments • Regulators liaise with trade associations as they can be seen to be communicating with the whole industry and not favour any particular company • Liaison with regulators will be top of our agenda in 2012/13 2011 Sales Review Q1 Sales 2012 Total Sales Increases Total Sales Increases Q1 2012 up 3.8% on Q1 2011 Sales reported by UKGCVA 2003 2004 2005 2006 2007 Year 2008 2009 2010 2011 2012 Q1 Breakdowns Consumer v B2B Comparisons to Q1 2011 • Similar mix to Q1 2011 • Consumer up 1.4% • B2B up 5.7% 37% 63% • Agents up 19.5% • Retail sales flat • Slight decline in leisure Q1 % of Sales Paper v Plastic Comparisons to Q1 2011 • Closed Loop cards up 11.8% • Vouchers down 12.2% Market Opportunities • • • • • • • • • Voucher market continues to out perform the wider economy Q1 indicates a slow down on the increases experienced in 2011 Digital gifting continues to be the hot topic Social gifting firmly on the agenda These new channels indicate new customers rather than cannibalisation Robust marketing plan for gift cards and gift vouchers essential for Christmas Desirability of cards and vouchers as a gift continues but fighting against continued discounting on merchandise Consumer market is seeing little competition from general purpose prepaid – at the moment Close eye on legislation and the media What Christmas Means to Me Holly Tyzack Rostrum PR UKGCVA PR Agency Andrew Johnson UKGCVA What Christmas Means to Me National Design Competition for Gift Cards, Gift Vouchers & eVouchers by Children Children aged 7 to 12 years invited to design a gift card, gift voucher or eVoucher based on their own understanding of Christmas Regional entries and winners Potential for winning entry to be printed and sold Objectives • Raise the profile of gift cards, vouchers & e; particularly amongst families • Encourage children to add gift cards/vouchers to their Santa List • Promote CSR for UKGCVA and members • Focus on helping children with financial education, teaching children how to look after money and understand the value of gifts • Create regional and national competition aimed at schools, afterschools clubs, youth clubs and other children's organisations • Profile UKGCVA as a thought leader and expert in retail press plus wider press including teaching, parenting and financial • Members to leverage additional press opportunities by featuring in internal newsletters and client communication Opportunity for PR when the competition is launched and then when winning entries are announced How? • Dedicated pages on UKGCVA website created with all information and how to enter • Press launch of competition, possibly at a retail outlet • Judging panel created to include members, potential for children's celebrity and teachers • Regional finals with press opportunities • Potential for the winning design to be sold by a member(s) • Winner receives gift cards worth £500 & potential for winner to be offered a days internship at a retailer • Runners Up prizes to be agreed PR Targets National Press & Media Children's Media Industry Press Internal News Blogs & Forums Your Involvement Your Support • • • • • Support with prizes Potential to host a launch or results event Potential to sell the winning entry Promotion in your own media and customer communication Contribution to costs What you get • • • • Part of a national campaign Potential for local and national CSR – the ‘big’ community Corporate PR Your brand featured on competition web site Costs • Budget of £10,000 for operations (prize fund separate) • If all members contribute that’s £130 per member • May not appeal to all members, anticipated 50% of members may support, so £260 from 40 members • Option for additional support to host events in different regions perhaps in stores or at head offices (additional local publicity) • Option for larger financial contribution for specific members • All members asked to contribute to prize fund Next Steps • • • • • • Launch, 4th September Closing date, 10th October Judging, 15th October Winners announced, 12th November Exec Board like it! Do you? Would you like to be involved? • Any Questions? Business to Business Market Research Participants • • • • • • 24 companies have signed up to the project Still chance to join Research interviews start in 2 weeks Results presented in September Data exclusive to participants until March 2013 If you have yet to submit your client list please send tomorrow! Emoney & The Threat of Regulation on Closed Loop Cards Siobhan Moore Locke Lord E-money & the threat of regulating closed loop gift cards Siobhan Moore UKGCVA Members Meeting June 2012 Why should you care? 25 Regulations • E-money Directive 2009/110/EC - updated existing e-money regulations prudential regime brought into line with PSD • Payment Services Directive 2007/64 - established a modern and comprehensive set of rules applicable to all payment services in the EU. 26 Continual monitoring • FSA established Payment Services and Emoney Stakeholder Liaison Group - in association with HM Treasury trade associations represented discuss implementation PSD and 2EMD opportunity to raise concerns learn about other initiatives from European Commission meetings held quarterly 27 What are the concerns? • Stakeholder perspective: - Regulations not yet implemented in some Member States i.e. Belgium, Spain, France, Cyprus, Poland and Portugal - Interpretation of regulations differ between Member States - Application of rules to differs between authorised entities i.e. e-money institution vs credit institution on safeguarding funds, passporting - Grey areas e.g. limited network exemption. Gives rise to differing interpretation between Member States 28 What are the concerns? • FSA / HMT perspective: - Can capital requirements be simplified? - Should the PSD and 2EMD be brought under the same legal regime? - Should new types of services be brought into scope i.e. overlay payment services and new types of billing services? - Limited network exemption – disparity between regulated and unregulated programmes. Could a lighter touch regime be introduced for providers of those activities that are currently exempt? - Is the current definition of e-money out of date? 29 Consultations UKGCVA responded to FSA and HMT regarding the PSD and 2EMD Review 24 April 2012 − − − − − − 30 supports the review of PSD and 2EMD supports alignment of PSD and 2EMD does not support HMT’s suggestion to ban products issued under simplified due diligence supports clarification of limited network exemption supports steps by the FSA and HMT to make passporting process smoother and quicker supports steps by the FSA and HMT to align the view of the role of agents and distributors between Member States What next? − FSA and HMT to publish next steps on PSD and 2EMD review − Consultation 2EMD due Nov 2012 − EC issued a Green Paper on card, internet and mobile payments. EC to announce the next steps Q2 2012. Any future legislative or non-legislative proposal will be accompanied by an extensive impact assessment − UKGCVA to reconvene Regulatory Working Group 31 Contact Siobhan Moore Senior Associate – Cards and Payments Tel.: +44 20 7861 9021 Mob: +44 7824 821 268 Email : [email protected] Second Floor 201 Bishopsgate London EC2M 3AB www.lockelord.com 32 VAT Jim Wilkinson PWC Martin Blanche PWC www.pwc.com Taxation of vouchers Jim Wilkinson Martin Blanche UK Gift Card & Voucher Association Meeting 20 June 2012 On the agenda Voucher Proposal Why a proposal on vouchers Proposal’s changes –Main areas Definition VAT treatment Taxable amount Lebara case Overview of case HMRC reaction UK Gift Card & Voucher Association © PwC 2012 20 June 2012 35 Voucher Proposal UK Gift Card & Voucher Association © PwC 2012 20 June2012 36 Why a proposal on vouchers? Background: • Main problems identified - A lack of clear common EU VAT rules - Enormous growth in type of vouchers, increased functionality, convergence with payment instruments, cross-border and chain transactions - Insufficient practical guidance deriving from CJEU rulings - Different approaches by Member States (patch-work of guidance) - Situation of double or non taxation UK Gift Card & Voucher Association © PwC 2012 20 June 2012 37 Why a proposal on vouchers? Objectives of the proposal: • Clear common EU VAT rules on vouchers - Create legal certainty and avoid situations of double or non taxation • Certainty on definition and VAT treatment of vouchers - Avoid distortions of competition between new forms of vouchers and the classic means of payment • Tax neutrality - Remove barriers to cross-border business development • Lower compliance costs UK Gift Card & Voucher Association © PwC 2012 20 June 2012 38 Why a proposal on vouchers? Proposed timing: • New legislation and administrative guidance to be adopted and published by the Member States on 1 January 2014 • Application of new Directive as from 1 January 2015 Timing still feasible? UK Gift Card & Voucher Association © PwC 2012 20 June 2012 39 Proposal’s changes –Main areas Changes to VAT Directive 2006/112/EC in 3 main areas: • Definition and classification of vouchers for VAT purposes • General VAT treatment of these vouchers including distribution and redemption services • Taxable amount UK Gift Card & Voucher Association © PwC 2012 20 June 2012 40 Definition and classification of vouchers for VAT The concept of ‘voucher’ • Key features - Carrying a right - To receive a supply of goods or services or a price discount or rebate with regard to a supply of goods or services - A corresponding obligation to fulfil this right by the issuer - May be in electronic or physical form UK Gift Card & Voucher Association © PwC 2012 20 June 2012 41 Definition and classification of vouchers for VAT purposes Discount voucher - “A voucher carrying a right to receive a price discount or rebate with regard to a supply of goods or services” › E.g. - Coupons attached to a product in the supermarket - Coupons in newspapers or to be downloaded from websites UK Gift Card & Voucher Association © PwC 2012 20 June 2012 42 Definition and classification of vouchers for VAT purposes Paid vouchers - Single purpose voucher (SPV): ◦ “An instrument carrying a right to receive a supply of goods or services where the supplier’s identity, the place of supply and the applicable VAT rate for these goods or services known at the time of issue of the voucher” › E.g. Pre-paid card only to be used for telephone calls - Multi purpose voucher (MPV): ◦ “Any voucher, other than a discount or rebate voucher, which does not constitute a SPV” › E.g. Gift card which can be used to buy goods from a department store UK Gift Card & Voucher Association © PwC 2012 20 June 2012 43 Point of taxation SPV • SPV is always considered as a payment on account, thus taxation upon receipt of the payment and on the amount received • No derogation from this principle allowed for Member States “where payments are made against a voucher” to avoid differences between point of taxation of SPV in X-border situations UK Gift Card & Voucher Association © PwC 2012 20 June 2012 44 Point of taxation MPV • No specific article on point of taxation MPV • Supply of good /service – exclusion of the commissionaire principle – single transaction • Applicable in B2B and B2C relationships Taxation upon redemption, and in principle no later than the goods are delivered or the services are performed (tax point) UK Gift Card & Voucher Association © PwC 2012 20 June 2012 45 VAT treatment of MPV and distribution service Example: issue of a MPV worth 100 (incl. VAT) via a distribution chain Distributor 1 Sale of MPV nominal value 100 Sale of MPV with nominal value 100 Invoice 10 (incl. VAT) Cash = 90 Distributor 2 Sale of MPV with nominal value 100 Invoice 20 (incl. VAT) Cash = 80 Issuer Cash = 100 Invoice 100 (incl. VAT) Final customer Principal service Sale Invoice Payment UK Gift Card & Voucher Association © PwC 2012 20 June 2012 46 Taxable amount paid voucher Taxable amount SPV • No specific article on taxable amount of the supply of the voucher - Taxable amount depends on capacity of intermediary - General rules apply Taxable amount MPV • Taxable amount of principal supply = nominal value* -VAT related to goods / services (pro rata if partial redemption) • Taxable amount of distribution service = nominal value* – purchase price paid – VAT related to distribution service * Nominal value = consideration (to be) obtained by the issuer of the voucher UK Gift Card & Voucher Association © PwC 2012 20 June 2012 47 Conclusion on proposals What is solved? MPV: principle of taxation upon redemption according to the VAT treatment of the underlying supply, regardless of the capacity of intermediaries in the supply chain of MPVs MPV: principle of taxation of the distribution services with right of deduction, regardless of VAT treatment supply embedded in MPVs What issues remain? SPV: Time of taxation clearly defined (payment on account) but VAT treatment will still depend on capacity intermediaries MPV: VAT liability in the hands of the redeemer but no clear definition of ‘redeemer’ MPV: No tax neutrality in cross-border situation UK Gift Card & Voucher Association © PwC 2012 20 June 2012 48 Next steps Evaluate the proposals • Agree example models for members • Consider the implications of the proposals on each model • Consider alternatives Treasury Liaison • Attend stakeholders meeting on 29 June and put forward views on the implications of the proposals UK Gift Card & Voucher Association © PwC 2012 20 June 2012 49 Outcome of Lebara case UK Gift Card & Voucher Association © PwC 2012 20 June 2012 50 Outcome of the Lebara case (CJEU, C-520/10) Operator / Issuer SPV Distributor End user = Acting in his own name and for his own account International outbound telephone calls/ Issuer • Specific circumstances of a SPV for telecoms services – al 28 (...) access only to services of one type, the nature and quantity of which are determined in advance and which are subject to a single rate of tax. • Single supply by the operator to the first distributor : service is qualified as telecommunication service • No supply between the operator and the end user Focus on contract and legal capacity intermediary UK Gift Card & Voucher Association © PwC 2012 20 June 2012 51 51 HMRC reaction Issue • Sch 10A says issue of vouchers is not taxed • Lebara says redemption is not taxed • Potential for non-taxation of supplies in relation to single purpose vouchers HMRC reaction • Revised legislation exclude SPV’s from Sch10A w/e from 10 May • Definition of SPV is different to that envisaged in EU proposals • HMRC view is that few if any current vouchers will be affected by the change in legislation UK Gift Card & Voucher Association © PwC 2012 20 June 2012 52 Questions? Jim Wilkinson [email protected] 0774 639855 Martin Blanche [email protected] 07917 000973 The information in this presentation is solely for guidance on matters of general interest and is provided without any liability for decisions taken - or not taken - based on it. The application and impact of laws can vary widely depending on the specific circumstances and facts involved. This presentation is not a substitute for professional advice. Before taking any action, please ensure that you obtain advice based on your particular circumstances from your usual PwC client service team or your other tax advisers. The materials contained in this presentation were assembled on 26 May 2011 and were based on the law applicable and information available at that moment in time. This presentation is proprietary and confidential information of PwC Tax Consultants BCVBA, Woluwedal 18, 1932 Sint-Stevens-Woluwe. All rights are reserved. 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