HMRC faces a demand for almost £26 million following a decision by the VAT and Duties Tribunal in the case between the department and Rank Group plc.
The tribunal ruled that the bingo giant overpaid VAT on certain types of amusement machines between 2002 and 2005. As a result, the leisure company is to request that the Revenue repays £25.9 million in the first quarter of 2010.
The decision follows an interim ruling from the tribunal in August 2008 that the UK's VAT treatment of amusement machines contravened the EU’s principle of fiscal neutrality.
In May 2008, the tribunal made a separate ruling in Rank's favour on the application of VAT to bingo.
Both rulings have been appealed by HMRC, and the Court of Appeal is scheduled to hear the cases in the coming April.
Earlier this week, the High Court confirmed that participation fees for playing mechanised cash bingo should have been exempt from VAT.
