GVC Holdings has become the latest gambling company to issue a claim to Her Majesty’s Revenue & Customs (HMRC) regarding compensation owed from tax charges related to fixed-odds betting terminals (FOBTs).
After William Hill followed the lead of Betfred and Rank Group earlier in the week, GVC has predicted that a successful claim ‘will result in a cash inflow to the Group of approximately £200m’.
GVC’s HMRC rebate stands from an April High Court ruling that favoured a joint appeal issued by Betfred and Rank which contested HMRC VAT charges on machine duties, with operators claiming that they could exempt charges in accordance to EU taxation policies and its precedent on fiscal neutrality.
The High Court sided with the betting operators on the grounds that HMRC had made no distinction with regards to the ‘supply of games’ until it updated its VAT policy in January 2013.
In a statement, GVC said: “GVC Holdings PLC has learned that the UK tax authority, Her Majesty’s Revenue & Customs, has taken the decision not to appeal the ruling of the Upper Tribunal (Tax and Chancery Chamber) in the cases of the Done Brothers (Cash Betting) Ltd (trading as Betfred) and Rank Group Plc concerning the application of VAT to certain gaming machines and fixed odds betting terminals within licenced betting shops.
“The Rank dispute concerned the VAT liability of gambling made using certain gaming machines prior to 5 December 2005 while the Done Brothers dispute related to the tax treatment of supplies of gambling by means of fixed odds betting terminals (“FOBTs”) during the period prior to 31 January 2013.
“The Group understands it will be eligible for a rebate of historic VAT incorrectly paid on gaming machine revenues from its own Ladbrokes betting shops in the period 1 October 2002 to 31 January 2013.”
Yesterday, William Hill confirmed it would seek compensation from the government, stating it was examining scenarios related to its rebate fee.
It added: “Whilst William Hill currently expects the net cash recovery to be material, its precise quantum remains uncertain. Nevertheless, the board has considered a number of scenarios which suggest a potential net cash recovery of between £125m and £150m.”