Chancy business

The taxpayer company ran slot machines that were operated using a remote random number generator (RNG) connected by cable to several terminals.

The business claimed a repayment of VAT on the basis the terminals were exempt under VATA 1994 sch 9 group 4 item 1. The devices were not “gaming machines” as defined by note 3 of item 1 because the RNG was situated outside the terminal and the element of chance was not provided by the machine containing the slot.

The First-tier Tribunal and High Court allowed the taxpayer’s appeals but the Court of Appeal disagreed ruling that a terminal with a separate but connected RNG should be characterised as a machine.

The company appealed to the Supreme Court which said the question was about how the element of chance was provided. The definition implied an active function as the game was...