Boots operated two sales promotion schemes under which a customer who bought a certain product (the ‘premium goods’) was given a voucher at no extra charge. That voucher enabled the customer to buy some goods (the ‘redemption goods’) at a reduced price. The cost of one of the schemes was borne by Boots; that of the other was incurred jointly by Boots and the manufacturer.

HMRC argued unsuccessfully that Boots should account for output tax on the sum of:

(1)the cash received from the sale of premium and redemption goods;

(2)the sum received from the manufacturer if the cost of the scheme was borne partly by the manufacturer; and

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