Do employers have to account for VAT in relation to childcare vouchers provided to employees under salary-sacrifice arrangements?

No, childcare vouchers are exempt from VAT.

However, employers normally incur administrative fees from their voucher provider in respect of the provision (approximately 6% to 7% of the face value of the voucher). HM Revenue and Customs (HMRC) had, in the past, allowed employers to recover VAT on those fees as a general business overhead. However, following the judgment in AstraZeneca UK Ltd v HMRC Case C-40/09 ECJ, where the European Court of Justice (ECJ) held that the provision of vouchers amounted to a supply of services effected for consideration, HMRC now considers that, because the fees are directly attributable to the exempt supply of vouchers, the normal partial exemption rules must be applied. A business is partially exempt if VAT is incurred on purchases that relate to exempt supplies. Generally, exempt input tax is not reclaimable.