It’s always handy to receive a tax refund. That’s the case for several top bookmakers and casinos. They have received over half a billion pounds after a legal battle with the HMRC had been won regarding VAT payments on Fixed Odds Betting Terminals (FOBTs).
Rank own Grosvenor Casinos and Mecca Bingo and have received a £77.5 million refund relating to the machines that have been described as the ‘crack cocaine of gambling.’ This covers the period April 2006 to January 2013.
In addition to the £77.5 million refund, Rank have also received compensation for interest that had been lost on the refunded income. That’s believed to be a total of around £5.5 million.
Rank and Betfred had joined forces saying that they had been charged VAT on the FOBTs. They felt this should not be the case as the roulette games in their venues are exempt from VAT and the same should apply to the FOBTs.
April of last year saw a judge rule in their favour. No appeal was launched by the taxman, so they were forced to reimburse the casinos and bookmakers. Others to receive tax refunds are Betfred (£97.7 million) and William Hill received a bumper refund of £208.3 million.
Entain, (who own Ladbrokes and Coral) received even more than that with £217.5 million being received. With so many shops in the High Street, it’s not surprising that so much has been refunded. Flutter (who own Paddy Power) got £15.9 million.
FOTBs have caused a great deal of criticism in the past. At one stage, they created a large amount of profits made by bookmakers. That all changed when the government stepped in and vastly reduced the maximum stake for playing the games. 2018 saw that figure reduced from £100 to just £2.
Rank have announced that they will be using their refund to make their balance sheet stronger. It will also be used to fund their ‘transformation programme.’
The increased income will greatly help Rank, according to analysts at Peel Hunt. They say that this amount will make them “’well-positioned to invest selectively as it weathers a somewhat uncertain winter.”
The pandemic has of course caused problems due to casinos being closed at times during lockdown. This cash boost means, according to the analysts that they “should exit the Covid-19-affected periods (whenever that will be) in a strong position.” Their share price also went up on news of the tax refunds.
