Mecca Bingo hits VAT Jackpot

by David Knoakes

Usually it is players at Mecca Bingo who hit the jackpot, but this time the company themselves have had a VAT jackpot windfall to the tune of a whopping £250 million pounds.

The Rank group, owners of Mecca Bingo have been battling HMRC for quite some time in a bid to get VAT they felt that they had to pay unfairly back. They won their case in the UK courts, but HMRC appealed this verdict which is why this ongoing battle was taken to the European Court of Justice – and Mecca Bingo have won again!

The European Court of Justice ruled HM Revenue & Customs service had breached the rule of fiscal neutrality by treating similar gaming machines in different ways for VAT purposes. For example, HMRC could have been asking for 20% VAT to be paid on bingo and 22% to be paid on other gaming machines, even though these games were all played under the same roof.

So basically the issue was – how can HMRC charge X amount of VAT for one product and X amount for another, even though the gaming machines were very similar. It is like they had one set of rules for one and another set of rules for another product – which is very unjust and unfair.

Anbreen Khan, VAT partner at Deloitte, who advised Rank, said, “This is a fair decision, which corrects the unlawful application of VAT across the industry. We have always considered that there was a fiscal imbalance in the VAT treatment of certain gaming machines and forms of bingo. We are pleased that the ECJ has endorsed the previous rulings of the UK Courts that VAT was wrongly levied and should be repaid.”

The judgment made by the European courts now clarifies how the principle of fiscal neutrality should be interpreted and sets out the test to be applied in determining the similarity or otherwise of gaming machines – whether they are licensed different or not.

HMRC could very well see lots of similar claims coming from other gaming companies in the near future as they have all been sitting back waiting for the outcome of The Ranks groups battle.