The UK Court found that wine supplied as part of a promotion was not supplied for a nil consideration, so the total price charged for the promotion had to be apportioned in a manner that included the wine.
The promotional offer offered customers three specified food items for £10, for which they could then receive a ‘free’ bottle of wine. HMRC argued the wine was supplied as part of the overall cost of the promotion and therefore was not free of charge for VAT purposes.
The court concluded that this concerned a single sale offer and the receipt of the wine was conditional on payment of the total of £10, as well as the purchase of the other food items. As such, it decided the customers paid the £10 for both the food and the wine, so the price had to be allocated between the four items not just the three food items.
Source: Mondaq
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