Supreme Court agrees with Rank gaming machines VAT ruling

Supreme Court agrees with Rank gaming machines VAT ruling

Thursday, July 9, 2015
Rank failed in its bid to overturn a previous decision

Mecca Bingo operator Rank Group has dismissed the effects of its UK Supreme Court defeat over a £30.7m (€42.5m/$47.1m) tax claim relating to gaming machines.

The UK’s highest court has upheld an appeal by HM Revenue & Customs (HMRC) in reclaiming previously-ruled overpaid taxes from the gaming operator.

The court’s decision relates to Rank claiming it had overpaid value added tax (VAT) on certain types of amusement machines at its Mecca Bingo clubs and Grosvenor Casinos between 2002 and 2005.

While the VAT and Duties Tribunal issued an interim decision in favour of the operator in August 2008, with £30.7m repaid to Rank in 2010, a Court of Appeal ruling went against Rank in October 2013 and the company began repaying monies in May 2014.

“As a consequence, the decision has no impact on Rank's financial performance or balance sheet strength in the current or future periods,” Rank said in a statement.

VAT applied to gaming machines during the period, but Rank contended that the definition did not match their machines, because the random number generator (RNG) used was not part of any terminal and the element of chance was not provided by the machine containing the slot.

The Supreme Court backed the Court of Appeal ruling of Lord Carnwath, who said the key point was that “the element of chance in the game is provided by means of the machine”.

Lord Carnwath added: “The definition implied an active function in the game as it is played, rather than the mere passive transfer of information to the player. No-one suggested any good policy reason for distinguishing between on the one hand, embedded software or a single-terminal RNG, and on the other a multi-terminal RNG.”

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