Rank looking forward to £25m VAT reclaim

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

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.

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