VAT WINDFALL A GOOD BET FOR PUBS AND CLUBS

Wales’ 7,700 pubs, restaurants, hotels and clubs are being urged to take advantage of an opportunity which has arisen to recover the VAT collected “illegally” by the Government from their takings from gaming machines.

Pub companies and licensees could share substantial windfall pay-outs from a £100m tax rebate pot created after a recent landmark European Court judgement found that the VAT exemption on machine income enjoyed by bookmakers and amusement arcade operators should have applied to everyone - or to no-one.

With the ruling coming as the UK is embroiled in a debate about the location of its new super casino, Sarah Case, Director of professional advisors Broomfield & Alexander said the Government could be forced to return between £8,000 and £10,000 per pub thanks to the ruling, lodging claims going back three years.

Disgruntled UK operators claim the exemption unfairly discriminated against them and entitles them to claim the tax back. The pub and club sector, which pays VAT on machine revenue at the standard rate, contends the tax loophole gave bookies and arcades an unfair advantage. They claim their own machine income suffered because more hi-tech tax exempted machines, such as fixed-odds betting terminals in bookmakers, proved more attractive to players.

“We are urging pub or club operators who think they may have a claim to seek professional advice as soon as possible to ensure their business has the opportunity to reclaim the maximum amount of output VAT possible,” she said.

Leased operator Enterprise Inns has revealed that it has submitted a "substantial" claim as a result of the court decision. If companies like Enterprise are successful lessees, they could expect to win back the proportion of the VAT charged to them and paid to the Revenue by the company on their behalf.

The Federation of Licensed Victuallers chief executive Tony Payne said many tenants and lessees were on shared arrangements for AWP machine income. "Tied licensees could expect to get back a proportion of the VAT settlement via their pub companies if claims are successful," he said. The Association of Licensed Multiple Retailers estimates a pub with two AWP machines could claim an average of between £8,000 and £10,000.

Sarah Case can be contacted on 01633 265828 or Cases@broomfield.co.uk