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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 bingo

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 from VAT.

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 amount claimed.

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.

Further information

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 issued previously.

Where you are in any doubt about the correct treatment please contact the Helpline on Tel 0845 010 9000.

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 2009-12-18 18:28:59 in Tax Articles

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