No justification

The taxpayer offered different types of cash gaming machines.

An issue arose as to the VAT treatment of these supplies with certain ones subject to VAT and others not. The taxpayer claimed that this result broke the principle of fiscal neutrality saying that having different VAT treatment of identical games was arbitrary.

A VAT tribunal found that VAT was due on mechanised bingo machines conducted under Gaming Act 1968 s 21 but not on those operated under s 14. This went against the principle of fiscal neutrality.

HMRC appealed.

Mr Justice Norris in the High Court said that the supply and consideration for the supply in each case were exactly the same but the differing VAT treatment led to a different financial outcome for the taxpayer. This was sufficient to distort competition. Nothing in the Sixth Directive or the adoption of the common system for VAT...