New test

Betting and gaming were taxed in different ways in the UK. Gaming machines operating under Gaming Act 1968 Part III were subject to VAT while fixed-odds betting terminals were exempt from VAT but fell within the betting duty regime.

The taxpayer company operated gaming machines and argued they were relevantly similar to fixed-odds betting terminals which were competition and should be taxed on the same basis.

The firm said the differential VAT treatment of Part III machines was a breach of the principle of fiscal neutrality under European Union law.

The First-tier tribunal found for the taxpayer company; HMRC appealed. The Court of Appeal referred to the European Court of Justice (ECJ) for a preliminary ruling.

The ECJ in effect said subjecting similar types of machines to different tax treatment was a breach of fiscal neutrality.

The Upper Tribunal subsequently remitted the case to the First-tier...