Rank Court Win Could Cost UK Gov 500m Pounds

As a result of a UK High Court ruling on Monday in favour of leading UK-based gaming business, Rank Group Plc, regarding the firms' overpaying of value added tax (VAT), the UK government could end up facing 500 million pounds in claims if others in the UK gaming industry follow Ranks' example.

The High Court handed down a decision entitling Rank, which is listed on the London Stock Exchange, to be reimbursed for VAT overpayments concerning its interval bingo and slot games. The firm has already received its bingo claim of 59.1 million pounds and is waiting to finalize its 26 million pound slot claim.

According to top financial group Deloitte, who has been advising Rank throughout the matter, the High Court victory is a landmark one, as it could rock the government if other gaming companies, pubs, adult gaming venues and casinos also seek reimbursement for VAT overpayments in the United Kingdom.

Said Deloitte spokesperson, Barney Horn, 'They won't all have made claims, but the majority of business would have, although it's hard to say how high the claims will be. They could range from tens of thousands of pounds to as high as Rank's 59 million pounds. The total could well be around the 500 million mark.'

Horn also said that it would be interesting to see how Her Majesty's Revenue and Customs (HMRC) reacts to the High Court decision and if they will in fact pay out all of the claims. Given the straight forward nature of the High Court statement, however, it is likely that the Court of Appeal will  uphold the decision.

Said an HMRC spokesperson, 'After studying the decision, we have some important legal points to consider before deciding on our next course of action. The decision affects all suppliers of mechanized cash bingo and we will shortly issue a Revenue and Customs brief advising on how overpaid VAT can be claimed.'

In May last year Rank won its first case against the HMRC, where a tribunal ruled that Rank was owed 59.1 million in VAT it overpaid on its interval bingo games. This week's High Court decision was in relation to the company's 26 million pounds in overpaid VAT between 2002 and 2005 for its slot machine games.