How to treat MGD (Machine Game Duty) transactions?

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Hi

How should we treat MDG transactions in the accounts?

From what I understand, gaming income with its respective tax should be treated separately from the normal trading income. This is because thre gaming net income should not be included in the final accounts for HMRC Tax Returns otherwise it would be double taxed right?

So how do we record the bank payments of MGD, in order to credit the bank but not count as an expense?

Many Thanks

Replies (8)

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By In a Daze
26th Mar 2017 16:31

you don't pay VAT on machine income however,you do pay tax.

The MGD is shown as a liability on the balance sheet.

Thanks (1)
Replying to In a Daze:
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By Finding Accounting
26th Mar 2017 16:44

Assuming no VAT...

"The MGD is shown as a liability on the balance sheet."

But what happens when MGD is actually paid?

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Replying to Finding Accounting:
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By In a Daze
26th Mar 2017 17:04

Debit: MGD liability
Credit: Bank
An example total receipts £100

Machine income P&l £80.00 (credit)
MGD Liability BS £20.00(credit)
Bank BS £100.00 (debit)

Then just reverse the MGD liability when you pay the duty as above.

Thanks (1)
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By Finding Accounting
26th Mar 2017 17:22

In a normal situation I understand that.

However, if they are included in the accounts as you mentioned, it will show a net revenue of £80 in the PLA.

Should I just remove that revenue manually when completing a Tax Return? (Otherwise it will be taxed twice)...

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By In a Daze
26th Mar 2017 18:21

you still have to pay tax on the £80.00.

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By Finding Accounting
26th Mar 2017 19:01

So double taxed???

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By In a Daze
26th Mar 2017 19:28

Duties are a separate form of taxation they do not replace income tax or corporation tax. You may of heard of others:
Fuel Duty
Alcohol Duty
Import Duty

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By Finding Accounting
27th Mar 2017 01:46

Yes of course.

It makes sense.

What a missunderstanding... Thanks for clarifying.

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