Rank Receives £42.5m VAT Refund
Rank, the owners of Mecca Bingo and the Grosvenor Casino brands, which is amongst the largest providers of UK bingo games, are said to be celebrating today as they’ve reportedly received a £42.5 m refund from HM Customs and Revenue in relation to overpaid VAT. This consists of £16.1 million for VAT paid on main session bingo fees from 2004 to 2009, and £26.4 million for VAT paid on amusement machines from 2002 to 2005. The repayment follows a number of successful rulings, both in the High Court and the Tribunal Tax Chambers.
The first case Rank brought was in relation to the double taxation that bingo clubs were subject to. Operators had to pay bingo duty and VAT on the fees taken in bingo games and sessions, but Mecca said that VAT should not be charged.
The refund claim for the second case started as jackpot machines were subject to VAT, and fixed odd betting machines prior to 2005 weren’t. Rank said that the VAT obligations contravened the European Union principle of fiscal neutrality, basically that as the machines were similar they should be treated the same as far as VAT was concerned. The tribunal ruled in their favour, agreed that they were similar and therefore the jackpot machines should not have been subject to VAT.
Deloitte gave advice to Rank in both cases, and always believed that they would win. Tony McClenaghan, a Senior Tax Partner for the company said; “This is a very welcome decision following on from earlier victories at the Tribunal and in the High Court. We have always been confident that there was a breach of fiscal neutrality in the differential treatment of the relevant gaming machines and we welcome the Tribunal’s confirmation of this fact. Taxpayers affected by this decision should now consider making claims for overpaid VAT”.
HMRC have appealed the rulings to the European Court of Justice. This is expected to be heard some time next year, although it is not thought likely to succeed. Rank must be keeping it’s fingers crossed on this, as if the HMRC were to overturn the original verdicts then they would have to return the payment, and to add salt to their wounds would also have to pay interest on this.
