UK’s gambling giants GVC and William Hill have announced they expect to receive repayment of up to £350 million from the Tax Agency following last month’s court ruling in favour of the betting industry.
In April, Betfred and the Rank Group won a claim before the Upper Tier Tribunal that they were wrongly charged value-added tax (VAT) on certain gaming machines prior to 2013. In a Wednesday statement, William Hill said that Her Majesty’s Revenue and Customs (HMRC) has decided not to appeal against the ruling. The betting firm now expects to be repaid between £125 million and £150 million as a result of the decision.
According to the bookmaker’s statement to shareholders, it had submitted claims before the UK Tax Agency that were “substantially similar” to the claims in the case brought by Done Brothers (Cash Betting) Ltd. (trading as Betfred) and the Rank Group, the owner of Mecca Bingo and Grosvenor Casinos. William Hill’s shares gained nearly 6% in early trading after investors received the news of a potential net cash recovery of up to £150 million.
The conclusion of the legal battle between the HMRC and UK’s betting firms opened the door to similar claims from other bookmakers. The latest gambling group to seek a refund for the VAT it wrongly paid within a 10-year period is GVC Holdings, which successfully completed the Ladbrokes Coral brand migration to its platform in March. In a media release this Thursday, the company said that it would be eligible for compensation for the VAT it was incorrectly charged on the gaming machine revenues from its own Ladbrokes betting shops.
GVC has estimated that in the period 1 October 2002 to 31 January 2013, it paid taxes on fixed-odds betting terminals (FOBTs) worth approximately £200 million and is now expecting the funds to be recovered in the same amount. The company’s shares also saw a slight upturn of 2%.
More Bookmakers Expected to Seek Tax Refund
On 17 April, the UK Tax and Chancery Upper Tribunal decided to side with Betfred and the Rank Group and uphold the lower court ruling that the VAT was incorrectly applied to the revenues from certain gaming machines before 2013.
The two betting firms argued that these games should not have been taxed as the same game but when delivered through different platforms remained exempt from the tax. This, according to the plaintiffs, breached the principle of fiscal neutrality.
Although the case was brought by Betfred and the Rank Group, both operators are yet to reveal whether they have been compensated or how much they expect to receive. In fact, the first bookmaker to officially announce that it is submitting a claim to the HMRC was William Hill, followed by GVC. According to some estimates, Betfred could be in line for £100,000 in a VAT refund. Other gambling firms may follow suit, seeking compensation from the Tax Agency. This could result, according to some experts, in a windfall of £1.5 billion for the gambling industry.