Slow take-up by pubs of Machine Games Duty

A lack of preparation for a forthcoming tax could see as many as 30,000 pubs being slapped with substantial fines, as HMRC notes that only 353 affected watering holes have signed up to the Machine Games Duty (MGD).

According to estimates from the British Beer & Pub Association (BBPA) the number of pubs registered for MGD is less than 2% of the 30,000 that it expects will be impacted by the duty and should be getting in touch with the taxman to avoid the potentially crippling penalties.

Fines of between 30% and 100% of unpaid tax can be handed out by HMRC, to non-compliers with the more severe fines being given where the taxman understands there to be more intent in avoiding paying the duty.

MGD is set to replace the Amusement Machine Licence Duty (AMLD) for providers of arcade and amusement machines from 1 February 2013.

An HMRC spokesperson said: 'We are in the early days of the registration window and we expect applications for registration to increase as we near the deadline. HMRC is working with industry stakeholders to ensure that those who are required to register do so in good time. HMRC has extended the deadline to register to 11 January to allow businesses more time to register after their busy holiday period.'

Most significantly, MGD will see the introduction of two alternative tax rates; 20%, where the stake is higher than 10p and has a prize exceeding £8, or 5%, where the stake is 10p or less and a prize of no more than £8.

The new rules will mean that machines known in the industry as 'skills with prizes' (or SWPs) will now be liable under the higher MGD rate, where as previously under AMLD they were exempt.

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