Rank set for £80m windfall as HMRC declines to appeal B2 VAT ruling

| By Nosa Omoigui
Her Majesty's Revenue and Customs (HMRC) has declined to appeal a ruling from the First-tier Tribunal Tax Chamber (FTT) regarding the application of VAT to B2 gaming machine revenue.
Rank agrees extension over HMRC refund claim

As a result, UK-based operator Rank Group has agreed a 60-day extension with the FTT to allow the company to settle its refund claim with HMRC – Rank is expecting to receive a fee in the region of £80m.

The case relates to incorrectly applied VAT to gaming machine revenue between 2005 and 2013.

Rank and Betfred were plaintiffs in the case. Before 2005, these machines were not subject to VAT as they were subject to gambling duty instead.

When the Gambling Act first came into force in 2005, however, a VAT exemption for fixed-odds betting terminals was removed, despite remaining in place for casino, online and electronic roulette machines.

Rank successfully challenged the imposition of VAT based on the inconsistency of the exemptions, resulting in the European Union’s Court of Justice ruling in favour of the operator. This challenge was upheld by the FTT.

Although HMRC initially appealed this decision, the Tribunal upheld the claims of Rank and Betfred.

It was at this point that VAT on B2 gaming machines (fixed-odds betting turnover) was replaced with a 20% duty, which eventually became 25% in 2015.

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