Rank and Betfred win VAT gaming machine case against HMRC
Government will not appeal the Court ruling in the case that dates back to 2005
The Rank Group and Betfred win the Court case against Her Majesty’s Revenue and Customs (HMRC) – UK’s tax collectors – based on VAT incorrectly applied and paid on revenue on certain gaming machines prior to 2013, by Rank for the period 2002-2005 and Betfred for the period 2005-2013.
HMRC has confirmed that it will not appeal the Court ruling in the case that dates back to December 2005, when the Gambling Act came into force. This saw a VAT exemption for B2 gaming machines (fixed-odds betting terminals) removed, despite remaining in place for casino, online and electronic roulette machines.
The Court’s decision sets a precedent for all gaming machine operators to claim back wrongly paid VAT. Prior to 2005, B2 machines were subject to a 15% betting duty, which was then replaced by VAT. Rank challenged the imposition of VAT, based on the inconsistency of the exemptions, which concluded with the Court of Justice of the European Union ruling in the operator’s favour.
However, it was not until 2013 that VAT was replaced by machine games duty, originally set at 20% before being raised to 25% of gross revenue in March 2015.
The Rank and Betfred challenge was upheld by the First-tier Tribunal Tax Chamber (FTT), which ruled that applying VAT on games based on the channel through which the end user accessed the content breached the principle of fiscal neutrality. When the HRMC challenged that Court’s decision, the Upper Tribunal ultimately ruled in favour of the operators in April, rejecting HMRC’s claim that the FTT erred in law and while the exchequer had leave to appeal, it ultimately decided against that, also.
