Rank Group set for windfall as HMRC backs down on VAT case

Bingo hall and casino operator Rank Group said UK tax authorities have decided not to appeal against a tribunal ruling over value added tax on slot machines.

Rank said the first-tier tribunal had agreed a 60-day extension to allow Revenue and Customs (HMRC) and Rank to agree the exact size of the claim, with the gambling firm still expecting to receive around £80m.

Pubs, arcades and betting firms are set to receive billions in tax refunds after they were unfairly charged VAT by the government on some of their gambling machines.

Judges last month ruled in favour of Rank, which owns Mecca Bingo and Grosvenor Casinos.

The judgment found that gambling and betting companies should not have paid VAT on a wide range of slot machines between 2005 and 2013, because they were similar in nature to VAT-exempt gambling devices such as casino roulette wheels and games found on online gambling sites.

It follows a verdict handed down in April last year in favour of the gambling firm Betfred, which found that owners of a different gambling device called fixed-odds betting terminals (FOBTs) — a machine nicknamed the “crack cocaine of gambling” by critics — were due a tax windfall for the same reason.

HMRC did not appeal against the FOBT judgment at the upper tribunal.

There are about 35,000 FOBT machines in Britain, and approximately 190,000 slot machines of all types. The gambling industry in the UK is now worth about £14.3bn a year compared with £8.4bn in 2011, according to the Gambling Commission.

The industry’s growth is lucrative for the Treasury with betting companies paying £2.8bn in tax in 2020-21.