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HM Revenue and Customs Brief 01/14


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Issued 23 January 2014

VAT: fiscal neutrality and gaming machines - HM Revenue and Customs (HMRC) action following the decision of the Court of Appeal in the case of HMRC v The Rank Group plc.

1. Summary

Revenue & Customs Briefs 75/09 (issued 8 December 2009), 11/10 (10 March 2010) and 39/11 (6 December 2011) provided updates about the ongoing litigation between HMRC and the Rank Group plc, in respect of the application of the European principle of fiscal neutrality to the VAT treatment of gaming machines between 1 November 1998 and 5 December 2005.

R&C Brief 11/10 advised that HMRC would pay any valid claims submitted by businesses in respect of the net amount of VAT paid on gaming machine takings during that period.  The Brief also made clear that protective assessments would be issued under section 80(4A) of the VAT Act 1994 to allow HMRC to recover these amounts if we were successful at a later stage in the litigation and claims were paid on this basis in 2010 and 2011.

HMRC has now won in the Court of Appeal in relation to machines, including multi-player terminals, previously found to have not fallen within the legal definition of a gaming machine.  The Court found that these machines did fall within the definition and so their takings at the time were taxable at the standard rate of VAT in the same way as other gaming machines and there was no breach of fiscal neutrality. In a second strand of the litigation relating to Fixed Odds Betting Terminals, the Upper Tribunal issued a decision on 4 October 2012 remitting the case back to the First Tier Tribunal for rehearing in light of the ruling of the European Court of Justice on 10 November 2011.

This means that legally there are now no adverse decisions against HMRC in respect of gaming machines. Therefore, HMRC will be recovering the amounts paid out in claims as per the terms of R&C Brief 11/10. 


Operators of gaming machines between November 1998 and December 2005 that received repayments of VAT from HMRC in respect of previously overpaid VAT on gaming machine takings.

2. Action required

All businesses that made a claim and received a repayment from HMRC in accordance with R&C Brief 11/10 will be asked to repay the amount they received.

HMRC will write to all affected businesses individually setting out the amounts they received from HMRC.  The letter will include guidance about how to repay the money.  If you are unable to make the full payment by the due date you should contact HMRC and explain why you are unable to pay on time. HMRC will then discuss your circumstances with you.

HMRC will start writing to businesses in January 2014 and we expect that this work will take several months so you may not hear from us immediately.

3. Future implications

Litigation continues with the First Tier Tribunal still to hear the remitted case on the issue of the similarity of Fixed Odds Betting Terminals (FOBTs) to other machines. Rank has also petitioned the Supreme Court to be allowed to appeal the Court of Appeal decision.

HMRC will issue further guidance, as appropriate, as these strands of the litigation are concluded.  

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Article Published/Sorted/Amended on Scopulus 2014-01-27 13:05:01 in Tax Articles

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