UK Operators Win the Gaming Machine VAT Court Case

After a court in Great Britain ruled that value-added tax (VAT) was not applied correctly to revenue earned from gaming machines prior to 2013, Her Majesty’s Revenue and Customs (HMRC) will not appeal.

The retail betting sector could receive significant rebates from HMRC after the decision which marks a precedent for gaming machine operators to claim VAT that they have wrongly paid.

A Curious Case

Operator Rank Group claimed the same, but for the VAT paid between 2002 and 2005.

This case began in December 2005 when UK’s Gambling Act came into effect and saw a VAT exemption for B2 gaming machines removed. The VAT remained in place for casino, online and electronic roulette.

Before 2005, B2 machines were subject to a 15% betting duty which was replaced by VAT. Rank has challenged this because of exemption’s inconsistencies.

In 2013, VAT was replaced by machine games duty, originally set at 20% before being raised to 25% of revenue in March 2015.

Case At An End

Tribunal Tax Chamber has ruled that applying VAT on games based on the channel through which the end accessed the content breached the fiscal neutrality.

HMRC challenged this decision. The Upper Tribunal ruled in favor of Betfred and Rank in April after rejecting the claim by HMRC that Tribuna Tax Chamber made a legal mistake.

Betfred’s spokesperson said that HMRC’s decision not to appeal means that the case is at the end, while Rank Group hasn’t commented yet.

Another operator, William Hill, said they have submitted claims similar to those in VAT challenge:

“Those claims have not yet been subject to the detailed evidential and ing reviews that will need to take place before entitlement to the refund can be settled. As a result of this announcement, we will now engage with HMRC to agree the for, quantum and timing of the refund.”

Source:

“Operators victorious in gaming machine VAT case”, igamingbusiness.com, May 20th 2020