Rank to receive £83m tax refund after B2 machine VAT case

Her Majesty's Revenue and Customs (HMRC) is to repay Rank Group £77.5m (€92.2m/$104.0m) after value-added tax (VAT) was wrongly applied to certain gaming machine revenue between 2006 and 2013.


HMRC will also be required to pay interest on this sum, which Rank estimates to total £5.5m, for a total rebate of £83m. Both the repaid VAT and interest will be subject to a 19.0% corporation tax.

The case dates back a number of years, and relates to fixed-odds betting terminals, or B2 gaming machines.

The introduction of the Gambling Act in 2005 saw the removal of a VAT exemption for fixed-odds betting machines. However, VAT exemptions remained for casino, electronic roulette and online betting terminals.

After challenging the VAT on the grounds of the erratic application of the exemptions, the European Union's Court of Justice ruled in Rank’s favour.

While HMRC initially challenged the ruling, it announced in May 2020 that it would no longer appeal, setting a precedent for gaming machine operators to claim back incorrect VAT from HMRC.

This ruling was backed by the First-tier Tribunal Tax Chamber (FTT), which HMRC decided not to appeal in August.

Rank was a plaintiff in the case, along with Betfred. Rank claimed that VAT had been incorrectly applied between 2002 and 2005, while Betfred focused on 2005-2013.

In its annual report for the 12 months to 27 September 2020, Betfred noted that it was to receive an estimated £97.7m from its claim. William Hill, meanwhile, will receive around £230.3m, and Entain up to £200m.