We want to have a referral program for our loyal customers. They will receive a business card that they can hand out to friends. When their friend comes into the store the friend received £2 off a £20=> purchase. I can easily just change an item price to reflect this £2 off. For the person who has 'done the referring', they will get a £2 coupon (like cash) that can use, even combine together regardless of the amount of their purchase.
They need to sign up for the scheme and will be assigned a number to track and make sure we can get them their cash coupon.
How do I account for this is sales? I was thinking setting up a tender type called COUPON that could be applied like cash. However, I am concerned how this will affect things on the accounting side. For example, if a customer pays with cash it is a purchase and we owe VAT. If they bring an item up to the till equal to £2 and present a £2 coupon (as they had referred a friend who came in and bought over £20), the sale is zero or free. Would we be liable for VAT on this 'sale'? Our prices are VAT inclusive.
Thoughts? Concerns? Ideas?
They need to sign up for the scheme and will be assigned a number to track and make sure we can get them their cash coupon.
How do I account for this is sales? I was thinking setting up a tender type called COUPON that could be applied like cash. However, I am concerned how this will affect things on the accounting side. For example, if a customer pays with cash it is a purchase and we owe VAT. If they bring an item up to the till equal to £2 and present a £2 coupon (as they had referred a friend who came in and bought over £20), the sale is zero or free. Would we be liable for VAT on this 'sale'? Our prices are VAT inclusive.
Thoughts? Concerns? Ideas?