Revenue and Customs Brief 5 (2020) VAT treatment on fixed odds betting terminals
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Revenue and Customs Brief 5 (2020) VAT
treatment on fixed odds betting terminals and gaming machines
Published 26 May 2020
Purpose of this brief
This brief explains HMRC’s position after the joint decision
of the Upper Tribunal on 15 April 2020 about the cases:
- The Rank Group Ltd UT/2018/0149
- Done Brothers (Cash Betting) Ltd (and others) UT/2018/0150
The brief clarifies how businesses with appeals related to this
decision can reclaim overpaid VAT.
Who needs to read this
Businesses with appeals claiming that HMRC treating their gaming
machine income as standard rated is a breach of fiscal neutrality,
where the appeals are currently stood behind either:
- The Rank Group Ltd and relate only to the period from 1 October
2002 to 5 December 2005
- Done Brothers (Cash Betting) Ltd (and others) and relate to the
period from 6 December 2005 to 31 January 2013
This brief does not apply to appeals that were originally stood
behind Colaingrove Ltd and to the operation of non-Fixed Odds Betting
Terminals (FOBT) from
6 December 2005 to 31 January 2013.
Colaingrove Ltd withdrew it’s appeal and a replacement lead
was set up. The Rank Group Ltd and 2016 G1 Ltd are now the joint lead
appellants for this case. The case is scheduled to take place at the
First tier Tribunal in November 2020.
The Tribunal has not decided the VAT treatment for the operation of
non-FOBTs from 6
December 2005 to 31 January 2013 yet.
This is a historical issue. The law changed with effect from 1
February 2013. It standardised the taxation of these and other gaming
machines through the introduction of Machine Games Duty.
This litigation started over 12 years ago and has involved hearings
before many courts, including the:
- Court of Justice of the European Union
- United Kingdom Supreme Court
It was then remitted to the UK First tier Tribunal, hence the long
duration of the litigation.
The Rank litigation
The Rank litigation from 1 October 2002 to 5 December 2005 relates
to the operation of gaming machines defined by the Gaming Act 1968
under the following:
- section 16/21 machines
- section 31/34 slot machines
These machines were usually found in amusement arcades and other
venues. HMRC treated Rank’s gaming machines as taxable at the
standard rate of VAT, whilst FOBTs,
the comparative machines were exempt from VAT.
Revenue and Customs Brief 1/2014
gave updates about the litigation between HMRC and Rank.
Done Brothers litigation
Done Brothers litigation relates to the operation of FOBTs from 6 December 2005
to January 2013.
From 6 December 2005, HMRC started treating FOBTs as taxable at the
standard rate of VAT. Before this they were exempt from VAT. Done
Brothers argued that playing a game such as roulette on a FOTB was like
playing the same game on comparator machines, such as the internet.
These comparator machines were exempt.
The Upper Tribunal Decision
The Upper Tribunal decided that:
- the different VAT treatment of the machines or games was a breach
of the VAT legal principle of ‘fiscal neutrality’
- the machines or games which were found to be similar in the eyes
of the typical consumer were treated differently for the purposes of VAT
- the machines or games should not have had a different VAT
treatment to other similar types of machine or games
This decision brings an end to these 2 strands of the gaming
Limits on claims
You will only be paid if your claim is properly evidenced.
Claims will not be considered unless they:
- have already been made within the relevant deadline
- are appealed within the appeal deadline
You cannot make new claims at this stage.
After examining a claim, HMRC may ask for more information. If this
is not provided, claims may not be paid.
HMRC reserves the right to examine the amount of the claims as
- the requirement to apply revised partial exemption
- input tax
- capital goods scheme calculations
Claims will also be adjusted for any amounts due to set-off under:
- section 81(3) of the VAT Act 1994 (outstanding debts,
- section 130 of the Finance Act 2008 (outstanding debts under any
other head of taxation)
Any payment will be made net, taking into account any sums owed by
you to HMRC.
How to progress a claim
After the outcomes in Rank and Done Brothers, HMRC will now pay any
If you think you have a
valid claim, you should first refer to HMRC’s email policy
You should only submit the information requested. You must quote
‘Gaming Machine Fiscal Neutrality claim’ in all
communication, by email to email@example.com.
If you are unable to send the information by email, you may send it
HM Revenue and Customs
VAT Error Correction Unit
Due to coronavirus (COVID-19), we recommend that submissions are
made by email wherever possible. The need to social distance means
postal submissions are likely to experience delays in processing.
What you need to provide
You’ll need to provide:
- the claimant name, postal address and VAT registration number
– including details of any changes since the original claim was
- all related Tribunal reference numbers
- the total claim, broken down by reference to each VAT accounting
period separately identifying output tax, input tax and the Tribunal
- details of any input tax that is irrecoverable as a result of the
claimants revised partial exemption position as applicable at the time
of the claim - this should include the supporting partial exemption
calculations, capital goods scheme calculations and confirmation of the
partial exemption method in use
- the category of gaming machines operated in the period for when
the claim was made
No further information should be provided at this stage. Information
given that is not requested may delay the processing of claims.
If you have an allocated Customer Compliance Manager, send the
information direct to them.
Agents representing multiple claimants may provide HMRC with a
- the required information for each of their clients
- your current agent authority to act in respect of these claims
Only the business which incorrectly accounted for VAT may make a
claim to recover it. Other claimants should:
- make contact using the relevant details
- provide details about why they believe that they are able to make
Direct tax implications
Repayment of overpaid output tax and statutory interest claims may
have direct tax implications. For example, repayment of output tax
should be treated as taxable receipts for Corporation Tax purposes in
the year repayment is made.
If you have not taken reasonable care in calculating your valid
claim, you may be charged a penalty.
HMRC email policy
Writing to HMRC by email
Use the following information to decide whether you want to deal
with us by email. We take the security of personal information very
seriously. Email is insecure, so it’s very important that you
understand the risks before you email us. We’ll not deal with you
by email unless you tell us you accept the risks of doing so.
About the risks
The main risks associated with using email that concern HMRC are:
- confidentiality and privacy – there’s a risk that
emails sent over the internet may be intercepted
- confirming your identity – it’s crucial that we only
communicate with established contacts at their correct email addresses
- there’s no guarantee that an email received over an
insecure network, like the internet, has not been altered during transit
- attachments could contain a virus or malicious code
How we can reduce the risks
We’ll desensitise information, for example by only quoting
part of any unique reference numbers. We can also use encryption.
We‘re happy to discuss how you may do the same but still provide
the information we need.
If you do not want to use email
You may prefer that we do not respond by email. For example, because
other people have access to your email account.
If so, we’re happy to respond by an alternative method.
We‘ll agree this with you either by telephone, fax or in writing
If you do want to use email
If you would like to use email, we’ll need you to confirm in
writing by post, email or fax that:
- you understand and accept the risks of using email
- you’re content for financial information to be sent by email
- attachments can be used
If you’re the authorised agent or representative we’ll
need you to confirm in writing by post, email or fax that your client
understands and accepts the risks.
You must also:
- send us the names and email addresses of all people you would
like us to use email with - for example, you, your staff, your
representative or your agent
- confirm you have ensured that your spam filters are not set to
reject or automatically delete HMRC emails
How we use your agreement
Your confirmation will be held on file and will apply to future
email correspondence. We’ll review the agreement at regular
intervals to ensure there are no changes.
You may opt out of using email at any time by letting us know.
About the Author
© Crown Copyright 2020.
A licence is needed to reproduce this article and has been republished
for educational / informational purposes only. Article reproduced by
permission of HM Revenue & Customs.
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Article Published/Sorted/Amended on Scopulus 2020-05-27 12:24:25 in Tax Articles