The Supreme Court has handed down its judgment in Commissioners for Her Majesty’s Revenue and Customs (Respondent) v The Rank Group Plc (Appellant) [2015] UKSC 48. This case has a long and complex procedural history. The remaining question was whether, during the period 1 October 2002 to 5 December 2005, the takings on a particular category of gaming machines operated by Rank were subject to VAT or exempt. Rank had argued that the difference in treatment between takings from the disputed machines, assuming they were exempt, and other similar machines which were taxable infringed the EU law principle of fiscal neutrality.
With effect from 6 December 2005 the legislation is said to leave no doubt that takings from the disputed machines are taxable from that date. However, prior to that, one of the conditions that rendered the takings from a gaming taxable was that “the element of chance in the game is provided by means of the machine”. In the case of Rank’s machines the element of chance in the disputed machines was provided by a detached random number generator (“RNG”) that was used by several machines.
The Court has dismissed Rank’s appeal. The relevant phrase was “the element of chance in the game is provided by means of the machine”. The element of chance was provided by the player’s action in pressing the button or pulling the lever which interrupted the RNG’s pre-programmed sequence of numbers at a particular moment. The RNG, while a necessary part of the process, responded in an entirely automatic way. It was therefore a fair use of language and consistent with the apparent policy of the legislation to describe the element of chance as provided “by means of” the terminal and not the RNG.
This article appears in the JHA July 2015 Tax Newsletter, which also features:
