Tribunal decision provides some clarity on AMLD

The case concerned the supply of what Dransfield Novelty Company Ltd supplied described as ‘electronic lottery terminals’. The supply was made to small members clubs and societies. The terminals contained an electronic ‘virtual’ stack of lottery tickets, consisting of both winning and losing tickets. When coins were inserted into the terminal it produced the next virtual lottery ticket, no paper ticket was produced.

HMRC took the view that this was clearly an ‘amusement machine’ and was therefore subject to the appropriate duty. To complicate matters further, the definition of an ‘amusement machine’ since July 2003 had changed on three occasions and therefore four periods needed to be viewed separately.

• Period 1, from 10 July 2003 to 18 July 2006 the definition is contained in Betting Gaming and Duties Act (BGDA) 1981 Section 25. Within this period no duty was charged on electronic lottery terminals.
• Period 2, from 19 July 2006 to 31 October 2006 the definition in Betting Gaming and Duties Act 1981 Section 25 changed and referred to the definition within VAT Act 1994 Section 23(4). This defines a gaming machine, ‘…machine which is designed or adapted for use by individuals to gamble (whether or not it can also be used for other purposes)’. The VAT Act 1994 refers to the definition of ‘gamin’ as defined in the Gambling Act 2005 Section 6.
• Period 3, from 1 November 2006 to 20 July 2009 the definition in Betting Gaming and Duties Act 1981 Section 25 remained unchanged with the reference to the Gambling Act 2005 defined within VAT Act 1994 Section 23 being removed. In addition VAT Act 1994 Section 23(6)(f) the ‘game of chance’ became a definition without any reference to other legislation and therefore included both games of chance and exempt lottery.
• Period 4, from 21 July 2009 to the appeal date Betting Gaming and Duties Act 1981 no longer referred to the VAT Act 1994 and only to the provisions within the Gambling Act 2005. For reference, the VAT Act 1994 Section 23 remains unchanged.
  
  

The tribunal concluded that only in period 3 did the terminal fall within the definition of an amusement machine and therefore subject to Amusement Machine Licence Duty (AMLD). For reference, period 2 also fell outside the provision as the ‘private society lottery’ test was satisfied within the Gambling Act 2005 Schedule 1 paragraph 10.

This is a complicated case with much emphasis given to definitions; it just shows you how important it is to get it right and to correctly apply legislation. Whilst HMRC is not pleased with the decision for period 1, 2 and 4 it has accepted it. It has stated that it will consider claims for repayment of overpaid AMLD subject to the normal capping and unjust enrichment rules.

This brief updates Revenue & Customs Brief 01/11 which was issued at the start of this year following another case and provided definitions of electronic bingo machines.