HM Revenue and Customs Brief 75/09
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Issued 8 December 2009
VAT and bingo duty: Update on implications of Rank litigation in respect of
Revenue & Customs Brief 40/09 was issued on 8 June 2009 following the High
Court decision in the case of Rank. This confirmed that participation fees for
playing mechanised cash bingo (MCB) should have been exempt from VAT following
the High Court’s decision that there had been a breach of fiscal neutrality in
the VAT treatment of this type of bingo.
Businesses were therefore invited to submit claims to HMRC for repayment of
any VAT accounted for in respect of MCB and these are being dealt with. Revenue
& Customs Brief 55/09 explained the effect these claims would have on
businesses’ liability to bingo duty.
Since then HMRC has received representations that the High Court judgment
applies more widely to other forms of bingo played under the same sections of
the Gaming Act as MCB. Having considered this carefully, HMRC accepts that the
judgment has a wider application to other forms of bingo participation games.
Claims for VAT accounted for on participation fees for other types of bingo, in
addition to MCB, will now be considered, subject to the guidelines below. This
means that the advice about bingo duty in Brief 55/09 now applies in relation to
all bingo participation fees.
However, the Rank litigation continues, with the Court of Appeal due to hear
HMRC’s appeal in April 2010. If HMRC is successful either then or at a future
date in a higher court, then any repayments made to businesses as a result of
the High Court decision will need to be repaid, including interest.
Businesses may therefore prefer to wait until the final outcome of the
litigation is known although protective claims can be lodged.
Rank, which operates Mecca bingo halls, claimed there had been
inconsistencies in the way VAT had been applied to the participation fees
customers paid to play MCB.
Last year the VAT Tribunal ruled there had been a breach of fiscal neutrality
as some participation fees were taxed while others were exempt. Fiscal
neutrality means that similar supplies must be treated the same for tax purposes
to avoid any distortion of competition. The High Court agreed with the
Tribunal’s decision that all participation fees for MCB should have been exempt
Making claims or adjustments
Where a business wishes to make a claim to HMRC for output tax wrongly
accounted for in respect of bingo participation fees, they may do so, although
evidence must be produced that output tax was accounted for, to substantiate the
All claims are limited by section 80(4) of the VAT Act 1994 to four years.
Until 1 April 2010, claims may be made going back to the accounting period
ending on 30 April 2006. Claims for non-standard tax periods ending on or after
1 April 2006 are also in time.
Correcting the error on your VAT return
Over-declarations of output tax can also be corrected by adjusting the
current VAT return if the net amount of all errors in the accounting periods
being corrected is:
- £10,000 or less, or
- less than £50,000 and less than 1 per cent of the box 6 figure on the VAT
return in which the adjustment is being effected.
These de minimis levels apply to the entire ‘claim’. Thus if your ‘claim’ is
for 10 accounting periods, it is the net over-declaration for all 10 periods
that must be within these levels.
Under regulation 34(1A) of the VAT Regulations 1995 (as amended), all
adjustments must be made within four years after the end of the accounting
period in which the over-declaration was made. Until 1 April 2010, adjustments
may be made going back to the accounting period ending on 30 April 2006.
Adjustments for non-standard tax periods ending on or after 1 April 2006 are
also in time.
Correcting the error on your bingo duty return
As explained in Revenue & Customs Brief 55/09 the High Court ruling that
participation fees are exempt from VAT will mean that there has been an
under-declaration of bingo duty. All businesses making bingo duty returns are
required to include any under-declaration of duty made on previous returns (box
7 of the return, form BD510 refers). If you do not account for any
under-declarations, HMRC will assess for the bingo duty due and you may become
liable to penalties.
Where HMRC has already assessed for the undeclared duty, businesses need not
make these adjustments. Revenue & Customs Brief 55/09 advised that we would not
enforce any bingo duty assessments related to participation fees for bingo other
than MCB. These assessments will now be enforced.
Details of where to send your claim can be obtained from update 2 to VAT
Notice 700/45 How to correct VAT errors and make adjustments or claims from the
HM Revenue & Customs Helpline on 0845 010 9000.
HMRC may reject all or part of a claim if repayment would unjustly enrich the
claimant. More details on ‘unjust enrichment’ can be found at part 14 of VAT
Notice 700/45 How to correct VAT errors and make adjustments or claims .
There may be direct tax implications where amounts of over-declared output
tax are repaid to businesses and your attention is drawn to R&C Brief 14/09
Where you are in any doubt about the correct treatment please contact the
Helpline on Tel 0845 010 9000.
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© Crown Copyright 2009.
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Article Published/Sorted/Amended on Scopulus 2009-12-18 18:28:59 in Tax Articles