Reclaimed repayment

During 2002 and 2003 Boots plc ran a number of sales promotions whereby a customer who spent £15 received a £5 voucher for money off certain goods.

The company accounted for VAT under the bespoke retail scheme and as agreed with Customs coupons were accounted for separately.

When the voucher was redeemed the consideration on the subsequent purchase was reduced for VAT purposes by the £5 credit given by the coupon.

The company reconsidered the VAT treatment of the coupons. It concluded that the VAT on the coupons should be taken into account when they were given to the customer and VAT should be charged on the full value of the redemption goods. As a result it claimed that it had made an overpayment of tax.

Customs repaid over £3 million VAT that Boots had overpaid. However Customs later reconsidered...