Betfred Court Case Victory Could See £1b Refunded to Bookies

A court case against the HM Revenue & Customs (HMRC) has ruled that bookmaker, Betfred, overpaid Value-Added Tax (VAT) on revenue from land-based Fixed Odds Betting Terminals (FOBT), and could see a £100 million refund.

According to SBC News, Betfred is one of many operators that paid on its revenue from land-based FOBT between December 2005 and January 2013. The VAT payments were replaced with a 20% Machine Games Duty in early 2013, which was increased to 25% in 2014.

Betfred argued that the revenue from land-based FOBTs should not be taxed, because similar products available in online casinos were not also subjected to the same tax. The tribunal agreed with this point, adding that online and land-based slot games “all met the same need from the point of view of the customer”. It also stated that collecting VAT on “breached the principle of fiscal neutrality”.

We welcome the decision regarding the historical tax treatment of fixed odds betting terminals which pre-dates the introduction of machine games duty in February 2013. Mark Stebbings, Betfred Managing Director.

According to various news sources, Betfriend could receive a £100m refund due to the unprecedented ruling, which could be extrapolated across all other betting companies and add up to an estimated £1b in refunds across the industry.

The HMRC may yet appeal the verdict, so at this time the figures are unconfirmed. However, a spokesperson from the HMRC told The Guardian that “this is an important judgment and HMRC is giving it careful consideration”.

FOBTs have been stealing headlines in casino news industry lately thanks to the controversial decision to reduce the maximum stake on land-based machines to £2. The reduction was delayed in June, with campaigners reportedly speculating that the delay was prompted by foreknowledge of the Betfred victory.

The Betfred Logo

The Betfred Logo ©Betfred

The Treasury, however, told The Guardian that any suggestion it delayed the cut in stakes because it expected a £1bn hit from the tax ruling was “completely untrue”.

Industry pioneer, Calvin Ayre, further speculated that the ruling could have further implications, as finding the similarities between online and land-based FOBTs negligible could be extrapolated into further changes implemented to online casinos. For example, he said, the £2 maximum wagering rule is currently only to be implemented for land-based machines, however this ruling could also be a base to implement the same maximum to the online versions.

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