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HMRC have clarified their position on electronic lottery machines and bingo machines, following the First-tier Tribunal decision in Oasis Technologies (UK) Ltd (TC581).
Oasis hired out electronic lottery ticket vending machines to private members’ clubs and sold virtual electronic lottery tickets for use in the machines. The case concerned the VAT liability of the supplies made by the clubs using the machines and whether they qualified for exemption from VAT.
The tribunal ruled that they were gaming machines within VATA 1994, Sch 9 Group 4 Note 1(d), but they also granted the right to participate in a lottery (Item 2) and the takings from the machines were exempt from VAT.
The Revenue will not make an appeal against the decision and has accepted that the machines will be treated as granting the right to participate in a lottery.
The income from them is VAT exempt, provided the machine has all of the following characteristics.
- it must provide a game of chance;
- the tickets must be randomly distributed;
- the player, operator or manufacturer must not be able to influence the order in which a ticket is revealed;
- the result of the lottery must not be determined or influenced by means of the machine; and
- where groups of tickets have been pre-loaded into a machine, the machine may randomly select a new group when the current one is completed.
HMRC have also refered to new machines that are used to play an electronic version of bingo.
Where such a machine meets the characteristics of bingo machines listed in Key Characteristics of Bingo, guidance published by the Gambling Commission in June 2009 (although some of the criteria are for regulatory purposes only), the taxman will accept that for VAT and gambling duties taxation, the machine is designed or adapted for playing bingo.
The supply made is exempt from VAT under VATA 1994, Sch 9 Group 4 Item 1.
If a machine will allow only the playing of bingo, it does not require an amusement machine licensing duty licence.
