HMRC outlines procedures for repayment of VAT monies

HMRC repayment of VAT monies
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HMRC has issued its guidance notes to businesses in the gaming, gambling and leisure industries looking to reclaim VAT following the Upper Tribunal’s decision to find in favour of Rank and Done Bros last month. Coinslot includes an extract of the Revenue and Customs Brief which was published on the website on 26 May.

HMRC policy paper

Purpose of this brief

This brief explains HMRC’s position after the joint decision of the Upper Tribunal on 15 April 2020 about the cases:

• The Rank Group Ltd UT/2018/0149
• Done Brothers (Cash Betting) Ltd (and others) UT/2018/0150

The brief clarifies how businesses with appeals related to this decision can reclaim overpaid VAT.

Who needs to read this

Businesses with appeals claiming that HMRC treating their gaming machine income as standard rated is a breach of fiscal neutrality, where the appeals are currently stood behind either:

• The Rank Group Ltd and relate only to the period from 1 October 2002 to 5 December 2005
• Done Brothers (Cash Betting) Ltd (and others) and relate to the period from 6 December 2005 to 31 January 2013

This brief does not apply to appeals that were originally stood behind Colaingrove Ltd and to the operation of non-Fixed Odds Betting Terminals (FOBT) from 6 December 2005 to 31 January 2013.

Colaingrove Ltd withdrew it’s appeal and a replacement lead was set up. The Rank Group Ltd and 2016 G1 Ltd are now the joint lead appellants for this case. The case is scheduled to take place at the First tier Tribunal in November 2020.

The Tribunal has not decided the VAT treatment for the operation of non-FOBTs from 6 December 2005 to 31 January 2013 yet.


This is a historical issue. The law changed with effect from 1 February 2013. It standardised the taxation of these and other gaming machines through the introduction of Machine Games Duty.

This litigation started over 12 years ago and has involved hearings before many courts, including the:

• Court of Justice of the European Union
• United Kingdom Supreme Court

It was then remitted to the UK First tier Tribunal, hence the long duration of the litigation.

The Rank litigation

The Rank litigation from 1 October 2002 to 5 December 2005 relates to the operation of gaming machines defined by the Gaming Act 1968 under the following:

• section 16/21 machines
• section 31/34 slot machines

These machines were usually found in amusement arcades and other venues. HMRC treated Rank’s gaming machines as taxable at the standard rate of VAT, whilst FOBTs, the comparative machines were exempt from VAT.

Revenue and Customs Brief 1/2014 gave updates about the litigation between HMRC and Rank.

Done Brothers litigation

Done Brothers litigation relates to the operation of FOBTs from 6 December 2005 to January 2013.

From 6 December 2005, HMRC started treating FOBTs as taxable at the standard rate of VAT. Before this they were exempt from VAT. Done Brothers argued that playing a game such as roulette on a FOBT was like playing the same game on comparator machines, such as the internet. These comparator machines were exempt.

The Upper Tribunal Decision

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
• the machines or games should not have had a different VAT treatment to other similar types of machine or games This decision brings an end to these 2 strands of the gaming machines litigation.

Limits on claims

You will only be paid if your claim is properly evidenced. Claims will not be considered unless they:

• have already been made within the relevant deadline
• are appealed within the appeal deadline

You cannot make new claims at this stage.

After examining a claim, HMRC may ask for more information. If this is not provided, claims may not be paid.

HMRC reserves the right to examine the amount of the claims as appropriate, including:

• the requirement to apply revised partial exemption
• input tax

• capital goods scheme calculations Claims will also be adjusted for any amounts due to set-off under:
• section 81(3) of the VAT Act 1994 (outstanding debts, assessments, etc.)
• section 130 of the Finance Act 2008 (outstanding debts under any other head of taxation)

Any payment will be made net, taking into account any sums owed by you to HMRC.

How to progress a claim

After the outcomes in Rank and Done Brothers, HMRC will now pay any valid claims.

If you think you have a valid claim, you should first refer to HMRC’s email policy.

You should only submit the information requested. You must quote ‘Gaming Machine Fiscal Neutrality claim’ in all communication, by email to

If you are unable to send the information by email, you may send it to:

HM Revenue and Customs
VAT Error Correction Unit
NE98 1ZZ

Due to coronavirus (COVID-19), we recommend that submissions are made by email wherever possible. The need to social distance means postal submissions are likely to experience delays in processing.

What you need to provide

You’ll need to provide:

• the claimant name, postal address and VAT registration number – including details of any changes since the original claim was made
• all related Tribunal reference numbers
• the total claim, broken down by reference to each VAT accounting period separately identifying output tax, input tax and the Tribunal reference number
• details of any input tax that is irrecoverable as a result of the claimants revised partial exemption position as applicable at the time of the claim – this should include the supporting partial exemption calculations, capital goods scheme calculations and confirmation of the partial exemption method in use
• the category of gaming machines operated in the period for when the claim was made

No further information should be provided at this stage. Information given that is not requested may delay the processing of claims.

If you have an allocated Customer Compliance Manager, send the information direct to them.

Agents representing multiple claimants may provide HMRC with a schedule, listing:
• the required information for each of their clients
• your current agent authority to act in respect of these claims

Only the business which incorrectly accounted for VAT may make a claim to recover it. Other claimants should:
• make contact using the relevant details
• provide details about why they believe that they are able to make a claim

Direct tax implications

Repayment of overpaid output tax and statutory interest claims may have direct tax implications. For example, repayment of output tax should be treated as taxable receipts for Corporation Tax purposes in the year repayment is made.


If you have not taken reasonable care in calculating your valid claim, you may be charged a penalty.

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