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HM Revenue and Customs Brief 70/09


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Issued 18 November 2009

This Revenue & Customs Brief outlines HM Revenue & Customs (HMRC) policy in relation to amusement machines known as ‘electronic lottery terminals’ and their liability to VAT and Amusement Machine Licence Duty (AMLD).


HMRC is aware that certain gaming machines are being marketed as ‘electronic lottery terminals’. The manufacturers argue that the product constitutes a lottery that is exempt from VAT and lottery duty, and outside the scope of AMLD. HMRC does not accept this as these ‘electronic lottery terminals’ are completely different from the lottery ticket dispensers or vending machines typically found in members’ clubs.


Certain machines being marketed as ‘electronic lottery terminals’ are gaming machines as they fall within the definitions of a gaming machine set out in section 23 of the VAT Act 1994 and s25 of the Betting and Gaming Duties Act 1981.


Gaming machine income is standard-rated for VAT purposes, and depending on stake and prize limits, gaming machines are liable to AMLD.

What you need to do

You must account for VAT on any income you receive from an ‘electronic lottery terminal’ and if you provide an ‘electronic lottery terminal’ on any premises you must hold a valid AMLD licence before you make the machine available for play unless the machine falls within any of the exemptions.

If you have been operating an ‘electronic lottery terminal’ that is liable for AMLD but have not obtained a licence, you should take action as follows:

  • apply for a licence to cover future provision of the gaming machine for play
  • include a voluntary declaration that you have provided a gaming machine for play without holding a valid licence for a specified period

You should do this by submitting a licence application form to HMRC Banking, St Mungo’s Road, Cumbernauld, Glasgow, G70 5WY with a letter stating the period for which you have not held a valid licence. If you make a voluntary declaration you will avoid a penalty being imposed for the period when you did not hold a valid licence and we may issue you with a default licence and assessment for the unpaid duty. The Amusement Machine Licence Application can be downloaded from the HMRC website

If you have not accounted for VAT correctly on your takings

You can correct underdeclarations of output tax by adjusting your current VAT return providing:

  • the net value of errors found on previous returns does not exceed £10,000, or
  • the net value of errors found on previous returns is between £10,000 and £50,000 but does not exceed one per cent of the box 6 (net outputs) VAT Return declaration due for the return period in which the errors are discovered

You can find where to send your claim in VAT Notice 700/45 - How to correct VAT errors and make adjustments or claims.

If you are unsure whether your ‘electronic lottery terminal’ is a gaming machine you should consult the HMRC Helpline on 0845 010 9000 with full details of the game before making the machine available for play.

If you do not agree that your ‘electronic lottery terminal’ is a gaming machine and you take out an AMLD licence for the machine you will not be able to appeal. So if you do not agree that your ‘electronic lottery terminal’ is a gaming machine you should contact HMRC on the Helpline on 0845 010 9000 with full details of the game. If HMRC think that your ‘electronic lottery terminal’ is a licensable machine they will issue you with a default licence and assess for the outstanding duty and VAT. You will then be able to challenge the decision and ask for your appeal to be heard by an independent tribunal.

Further information

HMRC provides guidance in the following Notices which can be viewed on under ‘Quick Links’ click on ‘library’ then on publications and then on ‘Notices, Information Sheets and other reference materials.

  • Notice 454 (October 2007) to help businesses decide whether their amusement machine is liable to Amusement Machine Licence Duty. Exemptions are covered in section 10.
  • Notice 701/13 (June 2004) to explain how VAT applies to amusement and gaming machines.
  • Notice 700/45 to explain how to correct VAT errors and make adjustments or claims.

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 2009-11-20 10:30:47 in Tax Articles

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