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HMRC to repay VAT on gaming machines

26 May: HMRC has published guidance outlining how businesses can reclaim overpaid VAT from the historical operation of some gaming machines. In April, the Upper Tribunal dismissed HMRC’s appeal in two long-running VAT cases where claimants argued that to charge standard rate VAT on the operation of specific types of gaming machines was a breach of ‘fiscal neutrality’.

In response HMRC has issued Revenue and Customs Brief 5 (2020) to clarify how businesses can reclaim overpaid VAT where they have an existing appeal related to the cases of The Rank Group Ltd and Done Brothers (Cash Betting) Ltd (and others) [2020] UKUT 0117 (TCC).

The reclaims can only be made in relation to the supply of machines made up to 31 January 2013, as the law changed from 1 February 2013.
The Upper Tribunal decided that:

  • the different VAT treatment of the machines or games was a breach of the VAT legal principle of ‘fiscal neutrality’;
  • the machines or games which were found to be similar in the eyes of the typical consumer were treated differently for the purposes of VAT; and
  • the machines or games should not have had a different VAT treatment to other similar types of machine or games.

HMRC will now pay any valid claims that were made within the relevant deadline or are appealed within the appeal deadline. Details of how to progress a claim are included in the Revenue & Customs Brief.