Decreased consideration

Retrospective claim for overpaid VAT

The taxpayer operated bingo clubs and calculated VAT on a game-by-game basis. In February 2007 HMRC issued Revenue and Customs Brief 7/2007 Cash Bingo: accounting for VAT on participation and session fees which stated that VAT should be calculated on the session basis. This was resulted in lower fees and possible overpayments of VAT. The brief invited bingo promoters who had calculated the VAT on a game-by-game basis to make a claim for repayment subject to the four-year time limit (VATA 1994 s 80(4)).

The taxpayer made a claim for earlier years under reg 38 of the VAT Regulations SI 1995/2518 on the basis that it had reduced the consideration received for participation fees and calculated output tax due for the period from 1996 to September 2004.

HMRC refused the claim but the First-tier Tribunal allowed the taxpayer’s appeal. HMRC appealed.

The Revenue’s main argument...