Machine Games Duty - 11th January Deadline Fast Approaching


There are just a few days left for bookmakers, casinos, amusement arcades, bingo halls, pubs, clubs and other venues operating gaming machines to register for Machine Games Duty (MGD). MGD comes into effect on 1 February 2013. Under the new tax regime, anyone responsible for premises from which gaming machines are provided for play must register with HM Revenue & Customs (HMRC) by Friday 11th January 2013.

In this short guide, Gemma Gower, Mitchell Charlesworth's expert VAT Manager, outlines the key changes and what they mean for your organisation. If you think you may be affected, you are urged to contact Gemma immediately on tel: 0151 255 2300.

Machine Games Duty

What is Machine Games Duty (MGD)?

You may be aware of the indirect tax changes for Gaming Machine income.  But in case you have missed it, Machine Games Duty comes into force on 1 February 2013 and replaces the current system of Amusement Machine License Duty and VAT on gaming machine income.  Machine Games Duty applies to all games which offer at least one cash prize, and at least one of the prizes is bigger than the minimum stake.

What does this mean for my organisation?

Anyone responsible for premises from which gaming machines are provided for play must register with HM Revenue and Customs by Friday 11 January 2013.  Businesses that fail to register with HMRC may face penalties of up to 100% of the tax due, so it is important to act quickly.

In practical terms, the current system of AMLD will no longer apply.  Income received from gaming machines is now exempt from VAT, so income relating to gaming machines should not be declared on the VAT return.  However, it is important to note that the business may need to consider its input tax recovery position as input tax is not always fully recoverable, where the business receives exempt income.  Those businesses considering purchasing new gaming machines are therefore encouraged to seek VAT advice ideally during the planning stages.

How will Machine Games Duty apply in Practice?

Businesses with Machine Games Duty payable will be required to submit a Machine Games Duty return and make payments which will be an additional administrative burden for businesses. 
Broadly speaking, Machine Games Duty will apply to games which have a cash prize that exceeds the minimum stake to play the game.

There are two rates of duty for Machine Games Duty:

  • Lower rate (5%) - Which applies to machines where the maximum cost per game on that machine (the 'maximum stake') is 10 pence, and the cash prize is £8.00 or less;
  • Standard rate (20%) - Which applies to any machine games subject to Machine Games Duty, not covered by the lower rate.

NB  Where a machine offers machine games that fall within both the lower and standard rate of machine games duty, then all of the games on that machine will be subject to the standard rate.  This is the case whether or not these games are actually played.

Do You Need More Information?

The information provided in this alert is provided as a general guide only.

If you would like further information on how Machine Games Duty will affect your business, please contact Gemma Gower on 0151 255 2300 or email: Gemma.Gower@mitchellcharlesworth.co.uk who will be delighted to assist.

You may be aware of the indirect tax changes for Gaming Machine income. But in case you have missed it, Machine Games Duty comes into force on 1 February 2013 and replaces the current system of Amusement Machine License Duty and VAT on gaming machine income. Machine Games Duty applies to all games which offer at least one cash prize, and at least one of the prizes is bigger than the minimum stake.

What does this mean for my organisation?

Anyone responsible for premises from which gaming machines are provided for play must register with HM Revenue and Customs by Friday 11 January 2013. Businesses that fail to register with HMRC may face penalties of up to 100% of the tax due, so it is important to act quickly.

In practical terms, the current system of AMLD will no longer apply. Income received from gaming machines is now exempt from VAT, so income relating to gaming machines should not be declared on the VAT return. However, it is important to note that the business may need to consider its input tax recovery position as input tax is not always fully recoverable, where the business receives exempt income. Those businesses considering purchasing new gaming machines are therefore encouraged to seek VAT advice ideally during the planning stages.

How will Machine Games Duty apply in Practice?

Businesses with Machine Games Duty payable will be required to submit a Machine Games Duty return and make payments which will be an additional administrative burden for businesses.

Broadly speaking, Machine Games Duty will apply to games which have a cash prize that exceeds the minimum stake to play the game.

There are two rates of duty for Machine Games Duty:

  • Lower rate (5%) - Which applies to machines where the maximum cost per game on that machine (the 'maximum stake') is 10 pence, and the cash prize is £8.00 or less;
  • Standard rate (20%)- Which applies to any machine games subject to Machine Games Duty, not covered by the lower rate.

NB Where a machine offers machine games that fall within both the lower and standard rate of machine games duty, then all of the games on that machine will be subject to the standard rate. This is the case whether or not these games are actually played.

Need More Information?

The information provided in this alert is provided as a general guide only.

If you would like further information on how Machine Games Duty will affect your business, please contact Gemma Gower on 0151 255 2300 who will be delighted to assist.

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