The Rank Cases
An Overview of Current and Future VAT Issues and Opportunities from Deloitte
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he Rank cases continue to move through the courts and it is important for all bingo operators, whether or not they are yet to submit claims, to
ensure that they are aware of the current position of the case and the issues and opportunities that they present. Update and Overview of the Litigation Regular readers will be aware that the Rank Group Plc (Rank), advised by Deloitte, has (to date) successfully argued that some interval bingo, and some gaming machine (slots) income that UK VAT law treated as subject to VAT should have been exempt from VAT. Rank’s arguments are based on the fundamental EU principle of ‘fiscal neutrality’. Fiscal neutrality dictates that similar goods or services should be subject to the same VAT treatment. For betting and gaming income the default position is exempt from VAT. This means that if a taxpayer can show that some betting / gaming income is subject to VAT and some ‘similar’ betting and gaming income is exempt from VAT the VAT that has been paid can be reclaimed.
Some interval bingo games, and some slots
were exempt from VAT, whereas others were subject to VAT. To correct the position Rank submitted claims for the VAT that it overpaid on its supplies of interval bingo and certain slots; treating all as exempt. HM Revenue & Customs (HMRC) have challenged the validity of the claims and the parties are currently disputing the matter in the courts. Rank has won at each stage of the UK judicial process and the proceedings have now moved to the European Court of Justice (ECJ); the highest court in Europe for the purposes of VAT. The ECJ is not concerned with finding facts; this is for the UK courts to decide. Rather, both parties agree specific questions to be put to the ECJ, to answer in accordance with EU law.
It is likely that a substantive hearing will take place in the late spring or early summer of 2011 with the judgment expected by the end of the year.
There are over 1200 similar claims made by other taxpayers currently stood behind Rank in these proceedings, awaiting the outcome. Once the judgment is handed down, Rank’s position will be known and HMRC will need to address each of the claims stood behind it. Each claim will be considered on its own merits and may be subject to further
Bingo Life
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