Rank Wins Battle With Taxman

In addition to the implementation of a national smoking ban in 2007 many in the bingo industry say that another problem faced by bingo halls in the UK is excessive taxation. For some reason bingo is the highest taxed form of gambling in the UK. An additional VAT tax was imposed in 2009 causing many bingo halls to close across the UK. Despite complaints from the bingo industry the government refused to relent and give the industry a break even though their actions put hundreds of bingo hall workers out of work. The government also denied that the additional tax was hurting the industry despite clear evidence to the contrary.

On March 22nd 2011 Rank Group which owns Mecca Bingo Halls across the UK announced that the company has received a rebate from the government worth about 154 million pounds. ($246,279,256.82 USD) The rebate announcement sent Rank shares up 16%. Rank said it had received 74.8 million pounds from Her Majesty’s Revenue and Customs in overpaid VAT^ taxes paid on bingo games from 1973 to 1996. Rank also said they will receive an additional 79.5 million pounds of interest on their claim in late March. Rank issued a statement which said, “These repayments follow successive rulings in Rank’s favour in both the First-tier Tribunal’s tax chamber and the High Court.”

Rank shares rose to 150 pence after the announcement and the company is currently valued at 580 million pounds. ($927,600,226.90 USD) Her Majesty’s Revenue and Customs appealed the rulings and the appeal will be heard by the European Court of Justice. Rank explained their position in the statement which read, “The claims concern the inconsistent application of VAT to bingo revenue generated by Rank’s businesses. It is Rank’s contention that this inconsistency contravened the European Union’s principle of fiscal neutrality.” Rank also said that a VAT tax levied against fruit machines was illegal and a judge agreed.

Mecca also has internet bingo operations that are not subject to the VAT tax levied against land based bingo halls. In 2007 after the smoking ban hit Mecca saw a steep decline in game attendance and launched their internet bingo operations to remain profitable. Mecca’s internet bingo operations were successful largely because of widespread brand recognition. It is rare for anyone to win a victory against the taxman but hopefully Rank will prevail in the European Court of Justice.