Rank wins landmark VAT judgement

Leisure Report, July, 2008

Rank Group is set to receive for a 36m [pounds sterling] VAT rebate after winning a landmark legal dispute with HM Revenue & Customs (HMRC), which could spark other bingo operators to lodge claims.

Rank persuaded the VAT and Duties Tribunal that HMRC's practice of charging VAT on interval bingo games was illegal under European law. The ruling concerns the games played during the intervals between sessions of a bingo game. Rank successfully argued that charging VAT on some versions of interval bingo but not others was in breach of the European principle of fiscal neutrality, which requires tax authorities to adopt a consistent VAT approach to services of the same or similar nature.

Tony McClenaghan, head of indirect tax at Deloitte, which advised Rank, said the case would benefit other bingo operators. Analysts are estimating it could provide a boost of at least 100m [pounds sterling] to the industry. Gala Bingo, the country's largest operator with 160 clubs, has already lodged its own claim.

HMRC has until 10 July to lodge a widely-expected appeal. Rank said that should the Revenue appeal, it was "unlikely there would be any material benefit to the group this year."

Rank's claim covered the 2003 to 2005 period. Depending on the outcome of an appeal, the company could launch a claim for other periods.