Rank Group Plc has reached an agreement with HMRC in relation to its outstanding VAT refund claim on slot machine income.
Providing a market update, Rank disclosed that HMRC has agreed to issue a refund of £77.5 million paid machine duties paid from April 2006 to January 2013.
In April 2020, an Upper Tribunal judgement voted in favour of Rank and Betfred’s claim against HMRC that had incorrectly imposed VAT-specific charges on land-based gaming machines.
The bookmakers’ ten-year appeal was settled as Upper Tribunal judges backed an original verdict that HMRC had failed to make a “clear distinction on the supply of games defined as FOBTS”.
This summer, Rank was granted a 60-day extension by the Tribunal Tax Chamber (FTT) to resolve its final settlement with HMRC, in which the LSE gambling group informed investors that it would pursue a minimum £80 million repayment.
“The refund has been agreed at £77.5m and should be received by the Group shortly. Interest is also due on the claim, which Rank expects to be circa £5.5m. Both amounts will be subject to corporation tax at 19%.” – read Rank’s governance statement.
Proceeds of the refund will be used to strengthen Rank’s ongoing transformation programme and balance sheet, with the settlement to be included in the company’s next interim results published on 27 January 2022.
Rank and Betfred’s breakthrough judgement could cost HMRC a total reimbursement of £1 billion to gambling PLCs and independent operators.
Following the Tribunal judgement, William Hill issued a statement confirming that it would begin a ‘gaming machines VAT challenge – in which management pursues a ‘material net cash recovery of between £125-to-£150 million’.
Meanwhile, it is estimated that Entain Plc’s Ladbrokes and Coral subsidiaries could reclaim a combined + £200 million VAT repayment.