HM Revenue and Customs Brief 39/11
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Issued: 6 December 2011
VAT: the decision of the Court of Justice of the European
Union in respect of HMRC v - The Rank Group plc: principle of fiscal
Revenue & Customs Briefs 75/09 (issued 8 December
2009) and 11/10 (issued 10 March 2010) provided advice about the
litigation between HM Revenue & Customs (HMRC) and the Rank
Group plc considering the application of the principle of fiscal
Following appeals by HMRC to both the Court of Appeal and the
Upper Tribunal, both Courts referred questions to the Court of Justice
of the European Union (CJEU) which issued its judgment on 10 November
Bingo providers and gaming machine operators.
For information only.
The CJEU judgment
The CJEU confirmed the findings of the UK courts about the
interpretation of the principle of fiscal neutrality. It confirmed that
similar supplies from the point of view of the consumer should be taxed
in the same way and that when considering whether there has been a
breach of fiscal neutrality there is no need to apply a separate
'competition' test, that is, it is not necessary to consider whether
the supplies are in competition with each other. However, the CJEU also
set out some tests for national courts to apply in deciding whether
gaming machines are similar. In addition, it found that when
determining whether there has been a breach of fiscal neutrality the
actual tax treatment should be based on the legal position rather than
any practice that may have been followed.
Bingo - In view of the CJEU’s judgment, HMRC accept that the
issue is now resolved in respect of bingo and our appeal in respect of
this will be withdrawn. All valid claims received, further to Brief
75/09, have been paid, so the decision not to continue with litigation
in respect of bingo means that HMRC will not be seeking any repayment
of these amounts.
Gaming machines - HMRC believes that the judgment of the CJEU
does not provide a final determination of the domestic litigation.
Further consideration of the gaming machine appeals will now have to
take place, with the parties and the domestic courts using the judgment
of the CJEU for guidance. Accordingly, our appeals will continue. Brief
11/10 provided advice about claims relating to VAT accounted for on
gaming machine takings between November 1998 and December 2005 and all
valid claims have been paid. The judgment does not extend the findings
of the UK courts to any other period, so any claims for periods prior
to November 1998 and post-December 2005 will continue not to be paid
The Rank Group claimed that the UK breached the principle of
fiscal neutrality in respect of its taxation of gaming machines prior
to December 2005 (when the legislation was changed to ensure all gaming
machine takings were subject to VAT) and its taxation of certain bingo
participation fees, particularly in relation to mechanised cash bingo
The Tribunal ruled that in respect of MCB there had been a
breach of fiscal neutrality because some participation fees were taxed
and others were exempt from VAT and the supplies were identical. All
bingo participation fees have been exempt from VAT since 2009.
The Tribunal also found that there was a breach of fiscal
neutrality in respect of the tax treatment of gaming machines and
similar non-gaming machines from mid-2003 and this period was extended
back to November 1998 in a subsequent hearing.
The High Court supported these decisions so HMRC appealed to
both the Court of Appeal and the Upper Tribunal (as the cases were at
different stages) and they referred a number of questions to the CJEU.
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Article Published/Sorted/Amended on Scopulus 2011-12-08 14:10:31 in Tax Articles