Slot Machine Tax in the UK

Slot MachineAmusement arcades and their many types of slot machines are extremely popular in British seaside resorts. Indeed the arcades may be in some way be one factor in the renewed interest in holidays in seaside resorts. The government’s proposals to change the taxation of amusement arcades could adversely affect this return to popularity of the resorts as some arcades may be forced to close as a result of increased tax payments.
There is VAT on slot machines and also specific duty on machines paying out over 500 pounds. Under the amusement machine licence duty legislation in the Betting and Gaming Duties Act 1981 certain machines require a licence and duty must be paid on these machines. Other gaming machines besides slot machines and those requiring a licence do not attract any taxes however under the new taxation the tax would affect all types of machines and even amusement arcade rides. The new tax would be paid on total turnover and not just on profit. Arcade owners also have to pay an annual licence fee so it is feared that some would have to close down due to the high cost to them of this new duty.Gaming arcades have been hit by many things in recent years not least the effect of the current economic climate on customer spending. The owners must pay the usual business taxes as well as VAT on slot machines. The smoking ban has had an effect on customer numbers just as it has had in land based casinos. There is also the growth in popularity of online and mobile device gaming (See article: Mobile Gambling Gaining in Popularity).

The question of VAT on slot machines was dealt with by the European Court of Justice which announced some clarifications of the complex issue of VAT on slot machines. HM Customs and Revenue sought these clarifications after several court rulings in the British courts which won VAT rebates for groups which claimed that they were unfairly taxed on slot machine takings. They claimed that the VAT was due on some machines and not on others and that it breached European laws. The European Court of Justice has ruled in favour of HM Customs and Revenue in this case so Revenue could seek the return of the rebates won in the British courts. It remains to be seen what course of action they will take.

All in all, the situation for slot machine operators either in amusement arcades or in clubs and pubs doesn’t look too promising financially or legally.

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