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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 neutrality


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 neutrality.

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 2011.


Bingo providers and gaming machine operators.

Action required

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judgment, HMRC accept that the issue is now resolved in respect of bingo and our appeal in respect of this will be withdrawn.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 (MCB).

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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© Crown Copyright 2011.

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Article Published/Sorted/Amended on Scopulus 2011-12-08 14:10:31 in Tax Articles

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