HMRC demands return of pubs’ machine tax rebates

By Ellie Bothwell

- Last updated on GMT

Related tags: Appeal, Hmrc

Operators will have to pay back the money, plus interest, within 30 days
Operators will have to pay back the money, plus interest, within 30 days
Pub operators will shortly receive demands to pay back the “several hundred million pounds” collectively owed in “overpaid” tax rebates in 30 days, HM Revenue & Customs (HMRC) has confirmed.

Last month, HMRC said it would be pursuing pub operators after a Court of Appeal decision reversed a High Court ruling from 2009 that led to hundreds of pub operators receiving tax rebates on overpaid VAT on gaming machine takings.

Letters

Now, the agency has started to send out letters to all businesses that made a valid claim and received a rebate. The letter tells operators to pay back the money, plus interest at 3% annually for the past two years, within 30 days. HMRC confirmed it would pursue either tenants or pubcos for the money, depending on who made the original claim.

However, for those licensees that might struggle to meet the repayment deadline, HMRC told the Publican’s Morning Advertiser​ it would be able to reach an alternative “mutually agreeable payment schedule” for those in financial difficulty, although this would include additional interest charges.

Millions owed

Managed pubco Mitchells & Butlers, which has 1,600 outlets, said it owes £12m while Whitbread, which operates around 400 managed pubs, said it was refunded £4.6m in VAT.

A Punch Taverns spokesperson said it could not disclose the amount it or its tenants owe but said the amount was “negligible” in comparison to the large managed chains.

It added that it ring-fenced the money it received and advised tenants to do the same, but could not say if the advice was taken.

'Very punishing'

David Jones, chairman of the Association of Licensed Trade Accountants, said two of his clients had received refunds totalling £1,852.03 and c.£1,200 respectively, but they had not yet been pursued for repayment.

“In instances where a publican has been sensible enough to save this money, HMRC should not exercise the right to charge interest,” Jones said.

“For HMRC it’s just a flick of a switch, but for tenants it will be very punishing. It’s inevitable many will have spent the money.

“You could argue that the pub companies should have held on to the funds.”

■ If you have received an HMRC repayment demand, then email ellie.bothwell@wrbm.com with the details.

Related topics: Other operators

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