Rank Group is on the way to a £25m windfall after a VAT and Duties Tribunal ruling.

The panel sided with the gaming giant and decided that the taxman had breached fiscal neutrality rules in some of its VAT demands on Rank.

'The Rank Group Plc is pleased to note today's interim decision from the VAT and Duties Tribunal . The Tribunal has ruled that, from November 2003 at least, the UK's Value Added Tax treatment of certain types of gaming machine was inconsistent with European Union rules concerning fiscal neutrality. This resulted in an overpayment of VAT by Rank,' the company said in a statement earlier today.

The case centres on the fact that before December 2005, certain types of gaming machine were exempt from VAT while similar gaming machines were subject to the tax, which Rank argued had broken fiscal neutrality rules.

Barney Horn, indirect tax partner at Deloitte, commented: 'This decision upholds the principles set out by the European Court of Justice in the Linnewebber case. The same principles should apply to any taxpayer which has paid VAT on the income from these types of gaming machine and, therefore, other taxpayers should consider if they have grounds to submit claims for overpaid VAT and interest to HM Revenue & Customs.'

The ruling is an interim decision as there are still specific additional points to be considered by the Tribunal. A second stage of the litigation is expected later this year or in early 2009 to confirm the decision, the period over which the claim applies, and the amount of VAT to be repaid, said Deloitte. The firm advised Rank on the issue.

The case could go all the way to the European Court of Justice, dependent on the outcome of the second stage, Deloitte added.