Betting wins Upper Tribunal decision against HMRC in FOBTs VAT dispute 

UK bookmakers could secure compensation for previous tax charges made against gambling machines, after HM Revenue & Customs (HMRC) lost its long-standing dispute against Rank Group and Betfred.

Last Friday, an Upper Tribunal led by Justice Anthony Mann and Judge Thomas Scott ruled in favour of the betting firms who had long disputed HMRC’s classification of VAT charges on Fixed Odds Betting Terminals (FOBTs). 

Rank and Betfred had formerly contested HMRC VAT charges on FOBTs wagering by underlining that tax exemptions were in accordance with EU taxation policy on lottery and gambling products ‘subject to conditions and limitations laid down by each Member State’.

Following EU precedent on ‘fiscal neutrality’, Rank Group targeted compensation on VAT gambling machine duties paid between 2002 and 2005, adding that exemption could be claimed against the provisions of HMRC’s ‘1994 Value Added Tax Act’. 

Similarly, Betfred had disputed HMRC VAT charges on FOBTS made between 2005 and 2013. The bookmaker stated that HMRC had made no distinction in the ‘supply of games’ available through FOBTs, and therefore it could claim exemption on certain casino games in line with industry’s taxation policy. 

Despite its original dispute with Rank Plc, HMRC did not update its UK gambling VAT legislation until January 2013 to cover FOBTs provisions.  

HMRC had previously lost two separate challenges against the bookmakers, who had won appeals sanctioned by the UK’s First-Tier Tribunal (FTT) court. Settling HMRC’s challenge, the UK Upper Tribunal had chosen to treat its separate appeals as a single issue. 

Betfred issued the following statement on the Upper Tribunal’s decision: “This is a historical tax case where the Upper Tribunal has agreed with the original court decision in July 2018 that licensed betting offices were wrongly charged VAT on Fixed Odds Betting Terminals between 2005 and 2013 before the introduction of machine games duty. 

“We will not be making any further comment as HMRC is still able to seek permission to have an appeal on the matter heard by the Court of Appeal.”