Amusement Machines – VAT and duties
HMRC have issued the first Revenue & Customs Brief of the year entitled ‘VAT and AMLD: HMRC’s treatment of electronic lottery machines and bingo machines’.
The brief covers the following two topics.
1. Lottery Machines
The brief is intended to clarify HMRC’s policy in relation to electronic lottery machines following a recent tribunal case which examined the VAT liability of Electronic Lottery Ticket Vending Machines (ELTVM). The tribunal agreed with HMRC that the ELVTM is a gaming machine but found that the machine allows the user to participate in a lottery and that the takings from this machine are exempt from VAT.
Following the tribunal’s decision, HMRC accepts that a machine, whose operation is the same as that of the ELTVM is VAT exempt.
The VAT exemption will apply to a machine having all of the following characteristics:
- The machine must provide a game of chance.
- The tickets must be randomly distributed.
- The player, operator or manufacturer must not be able to influence the order in which a ticket is revealed.
- The result of the lottery must not be determined or influenced by means of the machine, and
- Where groups of tickets have been pre-loaded into a machine, the machine may randomly select a new group when the current one is completed.
HMRC will repay claims from businesses that have overdeclared tax on their income from an electronic lottery terminal, subject to the normal rules on capping.
HMRC’s view is that the ELVTM’s are liable to AMLD.
2. Bingo Machines
HMRC also commented on the introduction of new machines which allow users to play an electronic version of bingo. Where the machines meet the necessary characteristics of a bingo machine, HMRC accepts that the machines are exempt from VAT. Where only bingo can be played an AMLD license is not required.