HM Revenue and Customs Brief 01/11
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Issued 19 January 2011
VAT and AMLD: HMRC's treatment of electronic lottery machines
and bingo machines
This Brief explains HM Revenue & Customs' (HMRC's)
position following the Tribunal decision in Oasis Technologies (UK)
Limited (Case ref TC00581). It also explains the treatment of
electronic bingo machines.
1. Lottery machines
The Tribunal agreed with HMRC that the Oasis Electronic
Lottery Ticket Vending Machine (ELTVM) is a gaming machine. However,
the Tribunal found that the Oasis ELTVM also grants the right to
participate in a lottery and that the takings from this machine are
exempt from VAT. HMRC is not appealing the decision.
Oasis hired out ELTVMs to private members’ clubs and sold
them virtual electronic lottery tickets for use in the machines. There
was no issue concerning the liability of these supplies. The Tribunal
appeal concerned the VAT liability of the supplies made by the clubs
using these machines and whether they qualified for exemption from VAT.
An ELTVM displays a lottery ticket on-screen and shows
whether a player wins a prize or not. The tickets are stored within an
electronic pack of a finite number of pre-drawn winning and non-winning
tickets. Packs of tickets are randomised securely prior to being
supplied to clubs and are downloaded onto the hard drive of the ELTVM.
The order in which tickets are displayed is fixed once downloaded and
cannot be influenced by the player or club making the supply.
The Tribunal released its decision on 1 July 2010. It held
that the Oasis ELTVM is a gaming machine within Note 1(d) to Group 4 of
Schedule 9, VAT Act 1994 and that it also grants the right to
participate in a lottery within Item 2, Group 4 of Schedule 9. It ruled
that the supplies made are exempt from VAT.
In light of the conclusions of the Tribunal HMRC accept that
a machine, whose operation is the same as that of the Oasis ELTVM,
shall be treated as granting the right to participate in a lottery. The
income thereof is VAT exempt.
The VAT exemption will apply to a machine having all of the
- the machine must provide a game of chance
- the tickets must be randomly distributed
- the player, operator or manufacturer must not be able to
influence the order in which a ticket is revealed
- the result of the lottery must not be determined or
influenced by means of the machine, and
- where groups of tickets have been pre-loaded into a
machine, the machine may randomly select a new group when the current
one is completed.
Making claims or adjustments
When a business has overdeclared tax on its income from an
electronic lottery terminal determined to fall within the findings of
the Tribunal, HMRC will pay claims, subject to the normal rules on
We may also reject all or part of a claim if repayment would
unjustly enrich the claimant.
More details on how to submit a claim and 'unjust enrichment'
can be found in Notice 700/45 How to correct VAT errors and make
Amusement Machine Licensing Duty (AMLD)
While the Tribunal did not consider the liability of the
machines to Amusement Machine Licence Duty (AMLD), it did find that the
machines in question were gaming machines. This finding is consistent
with HMRC’s view that the machines are liable to AMLD.
HMRC is continuing to issue AMLD assessments on lottery
machines without an appropriate AMLD licence.
If you do not agree that your ‘electronic lottery terminal’
is a gaming machine you should phone the HMRC Helpline on 0845 010 9000
with full details of the game. If HMRC think that your ‘electronic
lottery terminal’ is a licensable machine we will issue you with a
default licence and assess for the outstanding duty. You will then be
able to challenge the decision by requesting a statutory review by HMRC
or by appealing to an independent tribunal.
2. Bingo machines
HMRC is aware that a number of manufacturers in the gaming
industry have recently developed machines which are used to play an
electronic version of bingo.
Where a machine meets the characteristics of bingo machines
listed in guidance published by the Gambling Commission in June 2009
('Key characteristics of bingo'), although some of the criteria are for
regulatory purposes only, HMRC will accept that for VAT and gambling
duties taxation the machine is designed or adapted for playing bingo.
The supply made thereof is exempt from VAT under Item 1,
Group 4, of Schedule 9, VAT Act 1994.
If a machine will only allow playing of bingo, it does not
require an AMLD licence.
For further information and advice please contact the
Helpline on 0845 010 9000.
More information to help businesses decide whether their
amusement machine is liable to AMLD can be found in Notice 454
Amusement Machine Licence Duty. Exemptions are covered in section 3.
About the Author
© Crown Copyright 2011.
A licence is needed to reproduce this article and has been republished
for educational / informational purposes only. Article reproduced by
permission of HM Revenue & Customs
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Article Published/Sorted/Amended on Scopulus 2011-01-26 14:13:18 in Tax Articles