William Hill set for £150m tax refund windfall from HMRC
London-listed operator primed for multi-million-pound boost after HMRC accepts ruling and ends appeal process
William Hill is expected to net a tax refund of between £125m-£150m after HMRC confirmed it would not appeal a court ruling which concluded FOBTs should be exempt from VAT.
The London-listed operator filed a “substantially similar” HMRC claim to those previously submitted by the Rank Group and Done Brothers Limited (Betfred).
In April, both firms won their legal case against HMRC after a judge at the UK Tax and Chancery Upper Tribunal service ruled that VAT charged on FOBTs was incorrectly levied.
“Those claims have not yet been subject to the detailed evidential and accounting reviews that will need to take place before entitlement to the refund can be settled,” William Hill said in a trading update.
“While William Hill currently expects the net cash recovery to be material, its precise quantum remains uncertain. Nevertheless, the Board has considered a number of scenarios which suggest a potential net cash recovery of between £125m and £150m.”
The ruling means further UK operators could be subject to multi-million-pound refunds due to incorrectly paid VAT. HMRC was expected to appeal against the decision, however EGR understands it will no longer take place.
An HMRC spokesperson told EGR: “Following extensive litigation, during which the parties exhausted every legal avenue available, HMRC accepts the Upper Tribunal’s decision.
“We are unable to provide a figure as HMRC will now need to verify each claim made by other operators is legitimate. Offset action will be taken to clear any outstanding HMRC debts before any refunds are made.”
HMRC initially charged VAT on FOBTs under a 2005 law which excluded them from a prior EU VAT exemption on casino, online and electronic roulette machines.
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 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.
William Hill’s share price increased by 3.9% in early trading on the London Stock Exchange.
Ladbrokes Coral owner GVC revealed in its 2019 full-year report that it could potentially receive a £200m refund from HMRC after submitting its own claim for incorrectly paid VAT.