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The VAT People’s View – Machine Games Duty; Preparing for its Introduction including the impact on VAT & Online Registration

2nd Nov 2012
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HMRC have announced that online registration for Machine Games Duty (MGD) has been launched. MGD comes in on 1st February 2013 and any business which is affected must be registered by 1st January 2013 or face penalties being levied.

It is worth noting this so affected clients can be fully prepared for when MGD comes in - MGD affects any business which operates gaming machines i.e. games where players pay in the hope they will win a cash prize which is more than the cost to play the game. MGD is a new duty and will replace AMLD (Amusement License Duty) and where a machine is subject to MGD, the income from that machine becomes VAT exempt.

There are 2 x rates of MGD; 20% standard rate and a lower rate of 5% where the maximum cost per game is 10p and maximum cash prize is £8.00.

There is also a VAT impact to the introduction of MGD as registered businesses will need to consider VAT partial exemption calculations, possibly for the first time if the business is, for example, an amusement arcade or family amusement centre or even a fully VATable business which operates a few gaming machines and as always with VAT planning is the key especially given that the recovery of VAT on the purchase of Gaming Machines made in the period July 2012 - 1st February 2013 is already affected.

Given that MGD registration needs effectively to be done before Christmas now is the time for accountants to speak to affected businesses to ensure they have properly planned both the actual implementation and impact it could have on the business VAT recovery wise.

David Miller is a director of The VAT People and can be contacted by e-mail here or on 0161 477 6600.”

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