British bookmakers are in line for about £1 billion in tax rebates after a UK court ruled that value added taxes were wrongly applied to revenue from fixed odds betting terminals between 2005 and 2013.
A tax tribunal ruled that collecting VAT on FOBTs between 2005 and 2013 had “breached the principle of fiscal neutrality” because similar roulette-style games played in casinos and online were exempt from the tax, according to The Guardian newspaper.
The ruling came in a case brought against HM Revenue & Customs by bookmaker Betfred. Revenue officials did not say if they plan to appeal.
According to the Guardian, if the ruling stands, the rebate for the whole of the bookmaking sector is expected to be at least £1 billion. Industry sources cited by the paper said Betfred alone was likely to reclaim £100 million.
The industry-wide figure is based on the rate of VAT paid on combined income from FOBTs between 2005 and 2013, which amounts to more than £8 billion plus interest.
Betfred’s case hinged on its claim that the decision to apply the 20 percent VAT rate to FOBTs from 2005, on top of a 15 percent betting duty to which they were already subject, was a breach of European tax law. HMRC removed VAT from the machines in 2013, replacing it with machine games duty that started at 20 percent and has since risen to 25 percent, the Guardian reported.
The ruling comes as bookmakers ready for a drastic cut in the amount allowed to be bet on fixed odds betting terminals. The UK government intends to slash the maximum amount allowed to be bet on the terminals from £100 to £2. UK bookmakers have said the cut could cause hundred of betting shops to close and cost thousands of industry jobs.
