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The VAT tribunal decided on 27 May 2008 that the VAT treatment of mechanised cash bingo provided by Rank Group plc was in breach of fiscal neutrality and, consequently, these supplies should be exempt from value added tax.
In a further interim decision dated 19 August 2008, the tribunal found that there had been a prima facie breach of fiscal neutrality in the VAT treatment of Rank's gaming machine takings and that these should have been treated as being exempt from VAT before 6 December 2005, when UK law was changed to make all gaming machine takings taxable.
A second tribunal hearing to hear further aspects of this issue is to be held in October 2009.
The Revenue has appealed against both of last year's decisions, and the High Court hearings are expected to be held in March or April 2009.
In the meantime, HMRC have published Revenue and Customs Brief 63/08 explaining their view of the law.
In essence they consider that the law remains unchanged in that VAT is and always has been properly due on supplies of mechanised cash bingo and on the takings of gaming machines.
Therefore, businesses should continue to account for VAT on such supplies.
With regard to bingo duty, HMRC will issue protective assessments to safeguard revenue.
These assessments will reflect the fact that if there is no VAT to deduct from bingo receipts, then additional bingo duty is due.
The Revenue says it will not enforce the assessments unless they lose on the substantive VAT liability issue.
