British bookmaker Betfred has won a court case against HM Revenue & Customs (HMRC) concerning the amount of tax it paid on its FOBTs which could see the industry as a whole be reimbursed around £1bn.
The tax tribunal ruled that Betfred should not have paid VAT on its FOBts between 2005 and 2013 with other games played online and in land-based casinos not being subjected to the same VAT. The court said it was a breach of ‘fiscal neutrality.’
During this period, British bookies paid a 15 per cent betting duty on their FOBT profits along with a further 20 per cent VAT rate which Betfred claimed was in breach of European tax law. The VAT on FOBTs was replaced in 2013 with a ‘machine games duty’ which was set at 20 per cent but has since risen to 25 per cent.
Betfred’s Managing Director, Mark Stebbings, said: “We welcome the decision regarding the historical tax treatment of FOBTs, which pre-dates the introduction of machine games duty in February 2013. It does not concern Betfred’s ongoing tax liabilities.”
As long as HMRC does not appeal the ruling and have it overturned, Betfred could get a VAT refund of up to £100m with other bookmakers also entitled to similarly large refunds.
A spokesperson for HMRC said: “This is an important judgment and HMRC is giving it careful consideration.”
The decision has not gone down well with some politicians as not only has the ait for the ruling delayed the launch of the FOBT stake reduction until April 2020, giving bookies the chance to make more money but it has also now rewarded them with an extra pay day.
Labour MP Carolyn Harris said: “I am incensed by this news and frustrated that due to recess we can’t bring the chancellor to the house to answer questions. If this government is guilty of playing Russian roulette with the lives of problem gamblers by holding off introducing the cut in FOBT stakes, as a sweetener to protect the Treasury from the wrath of the bookies, it will be beyond belief. If the bookies have this kind of power over the chancellor then this government is in more trouble than any of us can imagine.”
Matt Zarb-Cousin, the spokesman for Fairer Gambling, added: “Instead of giving the bookies a double win, Treasury should instead put the tax for remote gambling up to at least 25 per cent in the budget this year and enact a £2 stake on FOBTs by April 2019.”
The Treasury will offset the loss of tax from the machines by increasing the tax on online gaming.