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HM Revenue and Customs Brief 01/08


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Issued 3 January 2008

VAT: Partial Exemption – Cheshire Racing Tribunal Decision

This Revenue & Customs Brief article announces HMRC’s revised policy about recovery of input tax on Satellite Information System (SIS) services received by bookmakers following the Tribunal decision in the case of Cheshire Racing Ltd (VTD 20283). It updates Article 1 in Business Brief 17/06 that also concerns SIS. It uses a number of specialist terms, which are fully explained in Public Notice 706, Partial Exemption.


SIS provides live coverage of horse and dog racing, real time odds, results information and commentary and opinion from pundits. Historically, HMRC’s view was that this information related directly to the over the counter betting activity of Bookmakers, which is exempt for VAT purposes.

In the appeal of Town and County Factors (VTD 19616) the Tribunal found that there was a sufficient link between SIS costs and taxable supplies made, such that the costs were residual for partial exemption purposes. The Commissioners subsequently issued Business Brief 17/06 which set out how HMRC viewed the logic and wider application of the decision. The Business Brief stated that where the bookmaker contributed additional content to the SIS service so that it partly related to their taxable supplies, then the input tax incurred was residual for that bookmaker.

Cheshire Racing (VTD 20283)

Cheshire Racing Ltd disagreed with HMRC’s view. They argued that input tax on SIS should be residual even though they did not add additional content. They felt that VAT incurred on the specialist TV services was partly recoverable because it had a direct and immediate link with taxable supplies from gaming machines, as well as betting.

In deciding in favour of Cheshire Racing Ltd, the Tribunal found as a fact there was a direct and immediate link between the content of the SIS broadcast and gaming machine income. This applied even when the bookmaker added no additional information to SIS.

HMRC’s policy following Cheshire Racing Ltd

HMRC is not appealing the decision and now accepts that SIS services have a direct and immediate link to gaming machine supplies made by bookmakers as the SIS provides commentary relevant to those machines.

Claims for under-recovered input tax

Bookmakers may wish to claim input tax which, in the light of this Revenue and Customs Brief, was incorrectly treated as exempt. Claims should be submitted to the Local Business Advice Centre. They must use the Partial Exemption method applicable to each accounting period unless there are exceptional circumstances as to why an alternative method is needed. In this case they should apply to HMRC to use an alternative special method. All claims are subject to the relevant time limits.

Further information about making claims can be found in Public Notice 700/45 How to correct VAT errors or make adjustments or claims and Business Brief 28/04.

About the Author

© Crown Copyright 2008.

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.

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Article Published/Sorted/Amended on Scopulus 2008-01-11 01:26:36 in Tax Articles

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