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HM Revenue and Customs Brief 55/09


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Issued 20/08/09

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 return.

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 penalties.

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.

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Article Published/Sorted/Amended on Scopulus 2009-08-26 15:56:50 in Tax Articles

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