HMRC to fight VAT gaming machine ruling

Rank said that it anticipates that the next stage of this litigation will be heard in the UK courts in the first half of 2012.

HMRC had appealed at the European Court of Justice (ECJ) against a High Court ruling concerning Rank, dating back to 2009, that said the casino operator should receive £26m it had overpaid in VAT on gaming machines between 2002 and 2005.

The High Court said the fact that VAT had been charged on some machines — including category C AWP machines used in pubs — and not others had broken EU competition law.

Last month, the ECJ broadly agreed, and said that having different VAT charges on different types of machines that offer identical or similar services for customers represented an “infringement” of the principle of fiscal neutrality.

The HMRC has now said that it believes that the judgment of the ECJ does not provide a final determination of the domestic litigation.

In a statement HMRC said: “Further consideration of the gaming machine appeals will now have to take place, with the parties and the domestic courts using the judgment of the CJEU for guidance. Accordingly, our appeals will continue. "

The 2009 ruling led to hundreds of pub operators and licensees receiving tax rebates on overpaid VAT from the taxman - Whitbread claimed back £5m for its pub restaurants in 2010. However, operators faced the prospect of having to pay back their reclaimed VAT payments if the ECJ ruled in favour of HMRC.

HMRC said it would not contest Rank’s claims for overpaid VAT on bingo.