GVC joins bookmakers due VAT refund with £200m claim

GVC is in line to receive up to £200m in incorrectly charged VAT on its FOBT portfolio following the end of HMRC’s tax case appeal.

In a statement provided to shareholders, GVC said it was eligible for a rebate of historic VAT incorrectly paid on gaming machine revenues from its Ladbrokes betting shops between 1 October 2002 to 31 January 2013.

“The Group estimates that this will result in a cash inflow to the Group of approximately £200m,” GVC said.

The London-listed operator joins a growing group of UK retail bookmakers including Betfred, Rank Group and William Hill. Hiils revealed on Wednesday it was expecting a refund of up to £150m following an April Upper Tribunal ruling.

The dispute centres around payment of VAT on FOBTs within licensed betting shops. UK operators Rank Group and Betfred filed a lawsuit challenging an earlier HMRC decision to make these machines VAT taxable in 2005.

Before December 2005, supplies of gambling by means of FOBTs were exempt from VAT, although UK legislation was changed with the effect that such supplies became standard rated for VAT purposes.

Article 13B of EU directive 77/388 requires member states to be exempt from VAT taxation “betting, lotteries and other forms of gambling, subject to conditions and 30 limitations laid down by each member state”.

Recent EU legal cases have established the precedent of so-called ‘fiscal neutrality’, which requires equal VAT treatment of similar supplies that are in competition within each member state. Using this principle, Rank and Betfred successfully challenged HMRC’s guidance in the Upper Tribunal Court.

Other UK retail operators including Flutter, which operates Paddy Power betting shops, could also be in line for VAT refunds following this decision.

Flutter has not commented publicly on whether it has also submitted a claim to HMRC. Any potential Flutter pay-out would not be as substantial due to its smaller retail portfolio.