Bookmakers Consider Position Over FOBTs

In respect to HMRC overturned computations on FOBTs costs, bookmakers and hospitality businesses are considering whether they are eligible for multi-million VAT refunds from the government.

The Times reported this weekend that up to 1,000 UK businesses that ran fruit machines, one-armed bandits, and coin-pushers are considering filing a claim with HMRC for compensation.

From 2005 to 2013, HMRC collected VAT on gaming machines, which is the subject of the dispute. Betfred and Rank Group Plc have challenged the long-running issue, claiming that HMRC had broken its ‘fiscal neutrality standards’ by applying a VAT-specific penalty on land-based FOBTs while no such levies were imposed on traditional and online casino games.

Last April, an Upper Tribunal review led by Justice Mann and Judge Thomas Scott ruled in favour of bookmakers, finding that HMRC had never applied a “clear distinction on the supply of games defined as FOBTs – a factor that should have allowed businesses to claim VAT exemptions under the “1994 Value Added Tax Act.”

Following the decision, which HMRC could no longer appeal, William Hill and Entain Plc’s Ladbrokes Coral business announced that they would investigate tax rebates totaling £350 million, despite media speculation that the HMRC industry compensation would total £1 billion.

Betfred, the Done family-owned betting company, announced in its 2020 corporate statements that it had received a ‘exceptional credit charge’ of £99 million from its VAT appeal.

Betfred’s full-year 2020 results were reversed as a result of the figure, since the company had seen double-digit revenue and earnings decreases due to betting store closures in 2020.

The surviving independent bookies in the UK will most certainly cash in HMRC’s tax rebate, providing additional protection from pandemic disruptions in the 2020s.

Yet, as corporate governance awaits the generational judgement of the government’s review of the 2005 Gambling Act – which will see all industry laws, standards, duties, and technicalities comprehensively reorganised – it remains to be seen how gambling PLC businesses will approach the delicate matter.

Aside from the tax rebate, gambling is entering a critical H2 trading period, with city analysts examining interim reports for 2021, in which incumbents will be judged on how well they are prepared to compete against regulatory headwinds inbound from the UK, Sweden, Spain, and Germany, while maintaining their nascent US technology prospects…

Following its re-emergence from the epidemic, the gaming industry is well aware that it has entered another generational shift.

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About Joe Kizlauskas

Joe is a seasoned iGaming copywriter and speaker who has been in the business since 2015. He's written more words on all elements of iGaming than he likes to remember, and he's contributed material to a number of well-known brands. Joe may be seen playing 5 a side, at the gym or playing games on his Playstation when he is not writing.