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Gaming Machine Duty Blow to Private Members Clubs

In a serious blow to non-profit-making private members organisations, a small social club has failed to convince the First-Tier Tribunal that an electronic lottery machine that its members enjoyed for three years was exempt from Amusement Machine Licensing Duty (AMLD).

Despite recognising that developments in the law relating to amusement machines had given rise to confusion, the tribunal noted that Her Majesty’s Revenue and Customs (HMRC) had no discretion to look beyond the strict wording of legislation to interpret the will of Parliament and had been entitled to issue the club with a £5,630 AMLD demand.

The club operated a touchscreen lottery terminal between 2007 and 2010 on which members played roulette, poker and fruit reels in the hope of winning jackpots of up to £2,000 for a maximum £2 stake. The club had been informed by the machine’s supplier that it was not subject to AMLD as it was a lottery device specifically designed for use in private members clubs.

However, HMRC issued a default notice against the club on the basis that the machine was being used to play games of chance for prize money and thus fell within the definition of an ‘amusement machine’ within section 25 of the Betting, Gaming and Duties Act 1981.

The tribunal acknowledged that lottery machines had historically been exempted from AMLD but noted that, confusingly and perhaps unintentionally, legislative amendments introduced by the Finance Act 2006 had the effect that amusement machines such as the one operated by the club became subject to the levy.

The club’s arguments that Parliament had not intended to tax non-profit-making private members clubs on gaming machines and that HMRC should instead have targeted the machine’s supplier were rejected as unsustainable. The tribunal noted that HMRC’s duty was to implement fiscal legislation and that it had no discretion to interpret legislation other than strictly in accordance with its provisions.