| Tax tribunal
in April found for gambling firms that they had been overcharged VAT on FOBT
William Hill and GVC are
expected to reclaim up to £350m from HMRC after bookmakers and casinos
won a £1bn legal battle over tax paid on fixed-odds betting terminals
A ruling by the upper tax tribunal last month found that
gambling companies had been overcharged VAT on the machines for at least eight
In a statement to the stock market, William Hill said HMRC had
confirmed it would not be appealing the ruling, clearing the bookmaker to
submit a claim for a rebate likely to be worth between £125m and
As a result of this announcement, we will now engage
with HMRC to agree the support for, quantum and timing of the refund, it
Its shares climbed nearly 6% in early trading as investors
digested the prospect of the government having to return funds to the
GVC, the Ladbrokes Coral owner, did not comment on the
ruling but has previously said it could benefit to the tune of £200m from
a decision in the industrys favour. Its shares gained nearly 2%.
The refund is the result of a long-running case brought against HMRC by
the bookmaker Betfred and the Mecca Bingo owner, Rank, over VAT payments
between 2005 and 2013.
Mr Justice Mann and Judge Thomas Scott found
that HMRC should not have charged VAT on FOBT takings because the machines were
similar to devices such as casino roulette wheels, which are exempt from the
sales tax. He said, 'HMRC breached the EU test for fiscal neutrality'.
Emboldened by the decision, other gambling companies are set to lodge
claims for hundreds of millions more, just as government coffers are being
stretched by the Covid-19 response.
William Hill said it had submitted
claims substantially similar to those provided in the VAT
challenge. Whilst William Hill currently expects the net cash
recovery to be material, its precise quantum remains uncertain, the
company added. Nevertheless, the board has considered a number of
scenarios which suggest a potential net cash recovery of between £125m
Securing a tax rebate on FOBTs will provide a
welcome fillip for bookmakers, whose business has been hit by the suspension of
sporting events during lockdown.
It also means one last windfall from
the machines, which were highly lucrative until a public outcry over their
links to gambling addiction forced the government to reduce the maximum amount
that could be staked on the machines from £100 to £2.