Rank Scores Big Win In UK VAT Case

by Robert Lee, Tax-News.com, London

29 May 2008

The VAT & Duties Tribunal ruled recently that the UK’s VAT treatment of mechanised cash (or interval) bingo was inconsistent with EU rules.

The ruling means that The Rank Group Plc, which submitted its claim for repayment to HM Revenue and Customs (HMRC) in 2006, stands to recoup GBP36mn (EUR45mn) in overpaid VAT, according to Deloitte, the professional services firm.

Rank, the owner of Mecca bingo clubs, argued that the current position, under which some types of mechanised cash bingo are taxable while others are exempt from VAT, is contrary to the principle of fiscal neutrality. This requires the same or similar services to be treated in the same way for the purposes of VAT. The Tribunal accepted this argument and upheld, in principle, Rank’s claim for overpaid VAT of GBP36mn.

Tony McClenaghan, head of indirect tax at Deloitte, which advised Rank, commented:

“This decision upholds the principles set out by the European Court of Justice in the Linnewebber case. The same principles will apply to any taxpayer which has paid VAT on this type of bingo. It’s a case of eyes down for other taxpayers to consider if they have claims to submit for overpaid VAT and interest to HM Revenue & Customs.”

HMRC has until 10th July 2008 to appeal the tribunal's decision. Rank has stated that, should it decide to appeal, it is unlikely that there will be any material benefit to the company in the current year.

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