HM Revenue and Customs Brief 55/09
Submit Articles Back to Articles
Bingo Duty: Rank High Court Ruling on 8 June
This Revenue & Customs Brief sets out HM Revenue & Customs' (HMRC) policy on
bingo duty as a result of the Rank ruling, and it also reminds operators of
their legal obligations for accounting for bingo duty.
The High Court ruled in the case of Rank that their Mechanised Cash Bingo (MCB)
par fees were exempt from Value Added Tax because the way the UK had applied VAT
to MCB par fees had resulted in a breach of fiscal neutrality.
HMRC has sought leave to appeal against the High Court ruling but until and
if HMRC succeed in the appeal, the Rank High Court ruling has effect across all
taxpayers in the same situation.
HMRC is now considering claims for VAT output tax wrongly accounted for by
bingo operators on MCB participation fees. A Revenue & Customs Brief was issued,
number 40/09 which explains the action HMRC is taking.
Revenue & Customs Brief 40/09
The Brief also explained that HMRC was considering the impact of the High
Court Ruling on bingo duty.
Bingo duty implications
1. Bingo duty is calculated on bingo receipts (after any VAT due has been
deducted) minus winnings. The High Court has ruled that MCB receipts are exempt
from VAT. If VAT has been deducted from MCB receipts when calculating the amount
of bingo duty due on returns already submitted then bingo duty has been
underdeclared on those returns.
2. All businesses making bingo duty returns are required to include any
underdeclarations of bingo duty made on previous returns (box 7 of the return,
form BD510 refers). Following the High Court decision in Rank, HMRC requires
businesses to make adjustments for any underdeclarations of bingo duty for
returns in respect of prescribed accounting periods from September 2006 onwards
if they have not already done so. If you have not already adjusted an earlier
return then these adjustments should be made on your September 2009 bingo duty
Where HMRC has already assessed for the underdeclared duty, businesses need
not make these adjustments. (Please see the explanatory notes to the return).
3. Subsequent bingo duty returns submitted will be scrutinised by HMRC for
any additional duty included within box 7 of the return and returns received
will be risk assessed. Returns may be selected for additional checks to be made.
Some visits to businesses to check their accounting records may be made in
conjunction with other work to check claims for repayments of VAT as a result of
the Rank High Court Ruling.
4. If you fail to make the required adjustments and do not account for any
underdeclaration, HMRC will assess for the bingo duty due. In addition, a
failure to adjust your September 2009 bingo duty return may leave you liable to
5. HMRC maintains that its view of the law is correct and that MCB takings
remain liable to VAT. However, both businesses and HMRC will need to protect
their positions during the ongoing litigation. Businesses which make adjustments
for bingo duty as required at Paragraph 2 above may wish to make claims to
recover these amounts and appeal their subsequent refusal in the event that the
current ruling is reversed in a higher court.
6. HMRC does not accept that the High Court ruling extends beyond MCB to
encompass par fees charged on all bingo. However in order to protect our
position we will raise protective assessments for bingo duty due in case it is
finally determined that VAT is not due on any bingo par fees. Payment of these
protective assessments will not be enforced until and unless the final legal
position justifies such action.
About the Author
© Crown Copyright 2009.
A licence is need to reproduce this article and has been republished for
educational / informational purposes only. Article reproduced by permission of
HM Revenue & Customs under the terms of a Click-Use Licence. Tax briefs are
updated regularly and may be out of date at time of reading.
Follow us @Scopulus_News
Article Published/Sorted/Amended on Scopulus 2009-08-26 15:56:50 in Tax Articles