HM Revenue and Customs, the UK tax authorities, have decided not to appeal a tribunal judgement concerning casino operator Rank Group over value added tax on slot machines.
The first-tier tribunal agreed to a 60-day extension to allow HMRC and Rank to agree on the exact size of the claim, which the casino operator still assesses at £80 million.
The first-tier Tribunal issued its verdict on June 30, 2021, concerning VAT paid on slot machine profits from April 2006 to January 2013.
After the government incorrectly levied VAT on some of their gambling machines, pubs, arcades, and betting companies are likely to earn billions in tax refunds.
Rjected FOBTs pricing estimates
The Times reported earlier this year that up to 1,000 UK businesses who ran fruit machines, one-armed bandits, and coin-pushers were considering suing HMRC for compensation due to rejected FOBTs pricing estimates.
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.
An Upper Tribunal review led by Justice Mann and Judge Thomas Scott sided with bookmakers in April last year, ruling 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.”
Examination of tax rebates
Following the decision, which HMRC could no longer challenge, William Hill and Entain’s Ladbrokes Coral business announced that they would investigate tax rebates totalling more than £350 million, with the media speculating that the HMRC industry compensation will reach more than £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.