Gaming machine ruling changes HMRC’s position

HMRC has clarified its position on historic claims about the VAT treatment of gaming machines following the outcome of two key cases with gambling companies

The two cases, The Rank Group plc TC/2013/04417 and 2016 G1 Ltd TC/2010/08268 were heard together and relate to the third strand of the gaming machine fiscal neutrality litigation. In the case of Rank, there was an estimated £80m in VAT in dispute, which the Supreme Court ruled had been paid in error.

This is a historical issue but still affects a number of long-standing claims. The law changed with effect from 1 February 2013 when the machine games duty was introduced to standardise the taxation of these and other gaming machines.

The gaming machine litigation started over 13 years ago and consisted of three different strands, now compressed into two outstanding cases. Although it is not possible to submit a new claim, it is possible to pursue claims that have been notified.

The following factors will be taken into consideration in relation to claims: the requirement to apply revised partial exemption, input tax adjustment and capital goods scheme calculations.

HMRC said it was ‘keen to progress the consideration and payment of valid claims as quickly as possible’.

To speed up claims, companies should provide the following:

  • the total claim, broken down by reference to each VAT accounting period separately identifying output tax, input tax and the Tribunal reference number; and
  • details of any input tax that is irrecoverable as a result of the claimants revised partial exemption position as applicable at the time of the claim — this should include the supporting partial exemption calculations, capital goods scheme calculations and confirmation of the partial exemption method in use.

It is important to note that repayment of overpaid output tax and statutory interest claims may have direct tax implications. For example, repayment of output tax should be treated as taxable receipts for corporation tax purposes in the year repayment is made.

HMRC Policy paper, Revenue and Customs Brief 12 (2021): VAT treatment of gaming machines from 6 December 2005 to 31 January 2013


Sara White |Editor, Accountancy Daily

Sara White is editor of Accountancy Daily...

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