Gaming Machines – VAT and Duty

Les Howard
VAT Consultant
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After years of argument and Tribunal and Court cases, new legislation comes into force on 1 February 2013. The aim is to streamline legislation applying to gaming machines of al types, and to ensure a ‘level playing field’ in relation to the tax applied to such machines.

The VAT Act 1994 has a new section 23A which defines a ‘relevant machine game.’ Amendments to exempt Group 4 mean that machines that do not provide ‘relevant machine games’ are VAT-exempt. However such machines will be subject to the new Machine Game Duty (MGD). The overall aim is that VAT-exempt machines will be subject to MGD, but machines which are taxable will be exempt from MGD.

One significant factor, that operators will need to take into account is that MGD-chargeable machines, which are VAT-exempt, will necessitate a Partial Exemption calculation. Input tax on machine purchase or rental, for example, will not be deductible.

Major operators will doubtless already be prepared. The concern will be for public houses and working men’s clubs, students unions, etc., where gaming machine income is a subsidiary activity. Such organisations should make a diary note to find out whether they are liable to MGD or VAT.

HMRC guidance is at


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