UK: Ladbrokes Coral's owner and William Hill could recover up to £350m in FOBT tax

William Hill announced on Wednesday that Her Majesty’s Revenue and Customs (HMRC) has decided not to appeal against a ruling that could lead to the UK-based firm recovering between £125 million (USD 153 M) and £150 million (USD 184 M) in value-added tax (VAT) that it paid on betting machines.

A ruling by the upper tax tribunal last month found that gambling companies had been overcharged VAT on the machines for at least eight years. The court had decided it was wrong that revenues from some machines were charged VAT, while those from others were not, UK Finance Yahoo reports.

"Such differences as there were between the various comparator games in terms of their relevant characteristics did not have a significant influence on the decision of the average customer to use one machine or another," the Upper Tier Tribunal said when summarising the lower court’s decision.

GVC, the Ladbrokes Coral owner, did not comment on the ruling but has previously said it could benefit to the tune of £200m (USD 245 M) from a decision in the industry’s favor. Its shares gained nearly 2%, the Guardian reports.

The long-running case had been 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.

"As a result of this announcement, we will now engage with HMRC to agree on the support for, quantum and timing of the refund," William Hill said in a statement. "Whilst William Hill currently expects the net cash recovery to be material, its precise quantum remains uncertain. Nevertheless, the board has considered a number of scenarios that suggest a potential net cash recovery of between £125 million and £150 million."

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.