Bad news for Brit gambling groups

The legal triumphs of some British gambling groups fighting for the return of Value Added Tax (VAT) payments made to Her Majesty’s Revenue and Customs could be short-lived following an appeal by the tax authority to a European court, reports The Guardian newspaper.

The disputes with the Brit taxman centred on litigation to reclaim millions in allegedly unfairly levied VAT that bingo hall and pub operators had paid. Domestic court decisions resulted in the taxman having to return the payments, boosting the coffers of the gaming companies.

Having been vindicated by the European Court of Justice on the slot questions, however, it now appears likely that HM’s tax officials may be knocking at the door and demanding refunds of the refunds, probably in excess of GBP 100 million, the newspaper reports.

The Court issued a series of clarifications over the complex legal position on VAT for slot machine and bingo games following rulings in the British courts forcing rebate payouts to firms such as Rank Group, JD Wetherspoon, Gala Coral and Whitbread.

The companies had successfully argued that the UK authorities had taken an unfairly skewed approach to VAT, demanding it from some classes of gambling machine but not others. This, they claimed, was in breach of European rules on “fiscal neutrality”.

Spokesmen for HM Revenue & Customs said the ECJ judgment had helpfully clarified the rules. “We are studying the judgment and will issue further advice once the potential implications have been identified,” they told The Guardian.

In a more positive aspect of the litigation, the ECJ sided with bingo companies, finding that rebates of the order of GBP 254 million claimed by companies like Rank Group were justified. The news proved to be a fillip for Rank shares, which spiked upward 13p.

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