Sep

7

Future Discounts Are Not Present Reductions in Sales – Retailers Take Note

HM Revenue and Customs have won a case in the High Court, against high street retailer Boots, which will have implications for schemes that offer future discounts on purchases to customers. It involved the VAT status of ‘voupons’, which had been given to customers and which entitled them to a £5 discount on a future purchase. Boots contended that this entitled them to reduce the amount on which they accounted for VAT on the original sale by the value of the voupon. In the view of the High Court, however, no reasonable VAT Tribunal could have come to that conclusion: the voupon could affect the VAT payable only when redeemed against a purchase.