Bookmakers and hospitality businesses are examining whether they are in-line to receive multi-million VAT refunds from the government, in relation to HMRC overruled calculations on FOBTs charges.
This weekend, The Times reported that up to 1,000 UK businesses that operated fruit machines, one-armed bandits and coin-pushers are reviewing whether to claim compensation from HMRC.
The dispute relates to HMRC collecting VAT charges on gaming machines from 2005-to-2013. The long-running issue had been challenged by Betfred and Rank Group Plc who claimed that HMRC had broken its ‘fiscal neutrality rules’ by imposing a VAT-specific charge on land-based FOBTs, whilst no similar charges were applied to traditional and online casino games.
Last April, an Upper Tribunal review led by Justice Mann and Judge Thomas Scott sided with bookmakers, ruling that HMRC had never applied a ‘clear distinction on the supply of games defined as FOBTs – a factor that should have allowed businesses to claim VAT exemptions under the ‘1994 Value Added Tax Act’.
Following the judgement, which HMRC could no longer appeal, William Hill and Entain Plc’s Ladbrokes Coral unit declared that they would examine tax rebates totalling + £350 million – as media speculated that HMRC industry payout would total + £1 billion.
Publishing its 2020 corporate accounts, Betfred, the Done family-owned betting business reported that it had secured an ‘exceptional credit charge’ of £99 million from its VAT appeal.
The figure saw Betfred reverse its full-year 2020 results as its business had recorded double-digit revenue and earnings declines attributed to betting shop closures during 2020.
HMRC’s tax rebate will likely be cashed-in by the UK’s remaining independent bookmakers, securing further relief from 2020s pandemic disruptions.
Yet it remains to be seen how gambling PLC businesses will approach the delicate matter, as corporate governance awaits the generational judgement of the government’s review of 2005 Gambling Act – that will see all industry laws, standards, duties and technicalities comprehensively reorganised.
Tax rebate aside, gambling enters a crucial H2 trading period, as city analysts probe 2021 interim reports in which incumbents will be judged on how best prepared they are to compete against regulatory headwinds inbound across the UK and Sweden, Spain and Germany, whilst maintaining their nascent US technology prospects… Industry leadership is well aware that gambling has entered another generational flux following its re-emergence from the pandemic.