Sale of Goods By Employees

The liability to account for VAT depends on whether a supply has been made. When goods are stolen, no supply is made by the business, and so no output tax is due.

In the situation you have, where goods have been sold by employees from business premises, and cash is stolen, the goods are deemed to have been supplied and so output tax remains due on the sales. If the employee sold the goods at a lower price and put that amount in the till, that would be the consideration on which VAT is due.

One exception is that if you can satisfy the HMRC that there has been an agreement between the employee and the customer with the intention of depriving the business of the money then they will usually accept that there has been a theft of goods.

Date published 5 Dec 2012

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.