Hosts’ VAT rebate warning on AWP machines

Hundreds of licensees and many pubcos have been receiving tax rebates from Her Majesty’s Revenue & Customs (HMRC) after a court ruling in 2009.

A judge ruled in September of that year that casino operator Rank should receive £26m it overpaid in VAT on gaming machines between 2002 and 2005.

VAT had been charged on some machines — including Category C machines used in pubs — and not others, which broke EU competition law.

This left the door open for pubcos and licensees to claim their overpaid tax from HMRC.

However, licensees and operators faced the prospect of having to pay back their reclaimed VAT payments if the ECJ ruled in favour of HMRC in this recent case.

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

The case will now return to the High Court in the UK to consider its position in light of the ECJ judgement.

In the meantime, HMRC must now decide what action it takes.

“HMRC is studying the judgment and will issue further advice once the potential implications have been identified,” it said.

However, despite the positive ruling, Peter Coulson, the Publican’s Morning Advertiser’s legal editor, has informed licensees to wait until the UK ruling is finalised.

“I think the best advice for licensees is just to wait until after the UK Court of Appeal has made its decision,” said Coulson.

“The ECJ only answers questions set to it, it does not look at the whole case.

“So licensees should hang fire until the English courts have made their decision. It’s not over yet.”

He added that pub operators can now “rest easy”. “HMRC just have to roll over on this one.”

A spokesman for the British Beer & Pub Association agreed and added: “It’s looking good for the pubs that have put a claim in.
“HMRC hasn’t got a great footing to stand on here.”