Licensees liable to pay new machines games duty
It means that pub company tenants will be worse off as machine net profits are currently split between the pubco and licensee.
Kate Nicholls, strategic affairs director at the Association of Licensed Multiple Retailers, said that whoever pays the current amusement machine licence duty will be responsible for paying the new MGD, which was unveiled in the Budget last month.
The onus is generally on the tenant to pay, and the pub company can take up to a 50% share of the profits.
The British Beer & Pub Association is in talks with the Treasury to clarify how the new duty will work.
“We want to issue guidance to help licensees get to grips with the new system,” a spokesman said.
“In terms of who pays, the licensee is technically responsible, even if in practice they do have an agreement to delegate this to their supplier.”
However, as publicans will no longer have to pay VAT on the machines, it is also feared they will have the complex task of working out what proportion of the duty they pay that they will be able to claim back as running costs.
Nicholls added: “This is a lot of money. Operators will need to speak to their supplier about how this will work.”
Legal expert Peter Coulson advised licensees to seek advice as soon as possible about exactly how much they can claim back on the purchase or rental costs of such machines.
He said: “Flag this up early with your accountant as many may not have factored this in. It won’t be easy.”
A Treasury spokesman responded: “On average, the majority of independent and tenanted pubs will
pay less tax on machine games as a result of the introduction of MGD.
“The Government is introducing MGD to put the taxation of gaming machines on a more sustainable footing following repeated legal challenges to the VAT treatment of gaming machines.
“The Office for Budget Responsibility has verified that the measure will not raise extra revenue.
“Indeed, moving to a system of taxation based on a machine’s gross profits will be fairer than the old regime.”
