Rank wins VAT case at ECJ


The Rank Group Plc (Rank) has  won its case at the European Court of Justice (ECJ) successfully demonstrating that the fiscal treatment of certain supplies of gambling contravened the EC principle of fiscal neutrality.  This principle prevents a Government treating similar goods or services differently for VAT purposes.

Following successive wins at the Tax Tribunal and the High Court, the ECJ has confirmed that Rank had overpaid VAT on supplies of gaming machines and mechanised cash bingo.

Anbreen Khan, VAT partner at Deloitte, who advised Rank, commented: “This is a fair decision which corrects the unlawful application of VAT across the industry.  We have always considered that there was a fiscal imbalance in the VAT treatment of certain gaming machines and forms of bingo.  We are pleased that the ECJ has endorsed the previous rulings of the UK Courts that VAT was wrongly levied and should be repaid.”

In respect of similar gaming machines and identical games of bingo, the ECJ held that a breach of fiscal neutrality had occurred because of the differential VAT treatment.  The United Kingdom had sought to argue that there could be no breach of fiscal neutrality unless the differing VAT treatment of the supplies affected competition.  However, the ECJ held that as long as the supplies were identical or similar from the viewpoint of the player, competition did not have to be separately proved.

In addition, HMRC had also sought to argue that it had acted with ‘due diligence’ to ensure compliance with fiscal neutrality by changing the law to uniformly tax the relevant machines once they became aware of the differential treatment. In this regard, the ECJ agreed with Rank that there was no defence of ‘due diligence’ available to HMRC under European law.

In relation to gaming machines the guidance of the ECJ may need to be applied in the UK courts.


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