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Rules will affect devices offering prize bigger than entry cost
Supplies from gaming machines will become exempt from VAT on Friday 1 February, as the tax is replaced by machine games duty as the way of raising revenue from the devices.
The new legislation will affect machines that provide the player with a chance to win a cash prize that exceeds the amount he or she paid to take part.
Many businesses that were previously classed as fully taxable for VAT purposes will be partially exempt because they will be making both taxable and exempt supplies: for example, a pub with a fruit machine.
The new source of exempt income will not necessarily create an input tax problem because of the partial exemption de minimis rules.
