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
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
About the Author
© Crown Copyright 2008.
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Article Published/Sorted/Amended on Scopulus 2008-01-11 01:26:36 in Tax Articles