Broadway Gaming's £4.9m tax rebate appeal rejected by tribunal
Operator loses HMRC challenge as tribunal cites insufficient evidence of expenditure as key reason for rejection but wins out on free plays debate
Bingo and casino operator Broadway Gaming has been unsuccessful with its overall appeal against HMRC relating to a £4.9m refund on a remote gaming duty overpayment.
However, the First-tier Tribunal did agree with Broadway’s claim that the use of free plays (bonuses, free spins, etc.) in calculating profit for claiming remote gaming duty could be used.
The tribunal rejected Broadway’s appeal over the repayment after finding the operator failed to provide adequate evidence of expenditure in line with its claim.
Broadway originally claimed for a remote gaming duty repayment covering the period from December 2014 to September 2017 on the basis it was entitled to treat free plays as expenditure on prizes for the purpose of calculating profit.
HMRC rejected the claim, arguing winnings derived from free plays could not be withdrawn by a player until specific wagering requirements were met.
HMRC noted free plays were non-withdrawable winnings and not real-money prizes, therefore not making them eligible as an expenditure for the use of calculating profit.
Upon taking its appeal to the tribunal, Broadway said that grey areas in the Finance Act 2014 meant that there was not a “comprehensive definition of what constitutes a prize” for the calculation of profit.
The tribunal agreed, noting a “chicken and egg situation” when it comes to transitioning free plays into real-money but agreed that when free plays were converted into cash balances it could be used for calculating profit
On HMRC’s secondary claim that Broadway failed to provide sufficient evidence of expenditure, the tribunal agreed. It stated the firm had provided “inadequate alternative spreadsheets” for its claim which could not be used as evidence to HMRC or a court.
Speaking to EGR, Broadway Gaming CEO David Butler said: “I am happy with the First Tier Tribunal’s decision that we were correct in using free plays as a means of calculating profit.
“Technically, we have not lost the appeal and it is a small technical issue in terms of providing evidence that can be remedied.”
Broadway Gaming is allowed to appeal the decision.
Last December, Broadway Gaming snapped up 888’s B2C and B2B bingo operations for $50m.