GVC expects £200m windfall from machines VAT ruling

21 May 2020

The conclusion of the legal dispute over the payment of value-added tax (VAT) on revenue generated from gaming machines has led to GVC Holding revealing that it expects to see up to £200m repaid.

Her Majesty’s Revenue and Customs (HMRC) lost an appeal in the Upper Tribunal Tax Chamber in April, which supported the First-tier Tribunal’s (FTT) stance that VAT was incorrectly applied to B2 machine revenue.

HMRC ultimately decided against a further appeal, clearing the way for operators to claim for a VAT rebate. This has already seen William Hill’s board claim that it could see up to £150m repaid.

GVC has now announced that it expects to receive approximately £200m through its own claim. This covers the period from 1 October 2002 to 31 January 2013, on VAT paid on B2 machines in its Ladbrokes betting shops.

Other betting shop operators, including Rank Group, which was a plaintiff in the original case, are yet to comment on the case. When the FTT first ruled in the industry's favour in 2018, there were estimates that up to £1bn in rebates would be paid out.

The challenge was originally filed by Betfred alongside Rank, with the pair arguing that VAT being charged on games provided via a B2 machine, while the same game delivered through different platforms remained exempt, breached the principle of fiscal neutrality.

The Court of Justice of the European Union had already supported this argument in a case brought by Rank in 2011. This ruling ultimately contributed to VAT for gaming machines being replaced by Machine Games Duty in 2013.

Betfred will now likely pursue a VAT rebate for the period from 2005 and 2013, while Rank’s rebate will cover 2002 to 2005.