Font Size

Revenue and Customs Brief 5 (2020) VAT treatment on fixed odds betting terminals


HM Revenue and Customs -Tax Authorities

Tax Articles
Submit Articles   Back to Articles

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 machines litigation.

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 appropriate, including:

  • 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, assessments, etc.)
  • 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 valid claims.

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

If you are unable to send the information by email, you may send it to:

HM Revenue and Customs
VAT Error Correction Unit
NE98 1ZZ

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 made
  • 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 reference number
  • 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 schedule, listing:

  • 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 a claim

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 via post.

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.

Opting out

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.

Follow us @Scopulus_News

Article Published/Sorted/Amended on Scopulus 2020-05-27 12:24:25 in Tax Articles

All Articles

Copyright © 2004-2020 Scopulus Limited. All rights reserved.