Fiscal neutrality not breached

The appeal concerned the VAT charge on takings from certain types of slot machines which machines comprised equipment in which the element of chance was provided by a random number generator (RNG) separate from but linked to the terminal used by the player.

The machines were multi-terminal: a single remote RNG was linked by a cable to a number of gaming devices.

The taxpayer company contended that the disputed machines were regulated by Lotteries and Amusements Act 1976 s 16 and Gaming Act 1968 s 21 and were exempt from VAT under VATA 1994 Sch 9 group 4 item 1.

HMRC argued that the devices were regulated by Gaming Act 1968 part III which applied to gaming by use of machines and were not exempt.

The VAT tribunal allowed the taxpayer’s appeal in 2008 and the Chancery Division upheld the decision. The matter...