V3.107 Two-part tariffs

The expression 'two-part tariff' is used to describe the situation where two or more related payments are made for a single supply. The expression was used by Denning MR in British Railways1. In that case, a student could make one payment to obtain a card entitling him to buy rail tickets at discounted prices. The Court of Appeal held that the payment for the card was an advance part payment, under a two-part tariff, for the supply of rail transport (rather than the separate supply of a right to a discount), and hence was the consideration for a zero-rated supply. This decision was followed in

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