Risk & Economy » Tax » Rank in full stop – slot machine VAT appeal rejected

THE FINAL ROLL OF THE DICE for gaming business Rank Group has ended in failure as the Supreme Court unanimously threw out its claim for £25m in overpaid VAT.

The claim related to the period between October 2002 and December 2005, and whether the takings on certain types of Rank’s slot machines using random number generators were subject to VAT.

‘Multi-terminal’ machines – which use up to six separate terminals connected by wires to a random number generator to produce the numbers for the machine’s software – were at the centre of the case.

Rank argued they should not be classed as gaming machines for VAT purposes as the random number generator was not part of any terminal and the element of chance was not provided by the machine containing the slot.

The upper-tier tribunal had previously ruled in Rank’s favour, the High Court agreed, but the Court of Appeal overturned the decision, before the Supreme Court ended the dispute in ruling against Rank.

In delivering the final ruling, judge Lord Carnwath, alongside Lords Neuberger, Reed,  Toulson and Hodge, said: “The element of chance in any game is provided ‘by means of’ the action of the particular player in pressing the button and so interrupting that ever-changing sequence at a particular moment. The terminal is not simply communicating information from the RNG, but is the active means by which the winning or losing combination is generated. The random number generator is a necessary part of that process, but its response (wherever situated) is entirely automatic.

“In those circumstances, it is a fair use of language in my view, and consistent with the apparent policy of the legislation, to describe the element of chance as provided ‘by means of’ the terminal.”

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