The United Kingdom’s tax regulator, His Majesty’s Revenue and Customs (HMRC), has won a substantial ruling in a dispute over the duties paid on free spins.
The tribunal hearing contested between HMRC and Jumpman Gaming Ltd (Jumpman) focused on the latter’s £13 million ($17.56 million) in contested unpaid monies (duties) that the tax office had repeatedly stated were outstanding.
HMRC wins in tribunal free spins case
These duties are officially titled remote gaming duty (RGD) by HMRC and are expected of any licensed gambling business operating in Great Britain. Still, the grey area surrounding free spins and their taxable status has been a much-debated topic in the gambling world.
Jumpman argued that the free spins awarded to consumers via its Mr Spins Mega Reel promotional feature had been accounted for; however, HMRC argued that they should be considered in line with Section 12 of the Finance Act 1994 (FA94).
Free bets, spins, and other prizes are awarded to gamblers who access this feature. According to the court report, Jumpman stated that the initial spin was the only taxable element.
Judge rules in favor of HMRC
Tribunal Judge Amanda Brown KC oversaw the case, which concluded that any free spins offered after the initial spin constitute a gaming payment in relation to sections 159 and 159A of the aforementioned Finance Act 1994.
The concluding summary would read “whether taxpayer (Jumpman) assessable to duty on spin of promotional game or subsequent spins of other games won following the promotional game, or on neither – application of section 159A Finance Act 2014 – duty due on subsequent free spins – appeal dismissed.”
Jumpman emerged from the courtroom with a small victory in the form of a decision regarding the overpayment of taxes related to the Mega Reel promotion. However, the company failed to have the entirety of that taxable balance wiped or substantially revalued; instead, it was viewed as a lawful reduction of the outstanding tax bill.
The court decision read “For the reasons set out above, the Assessments are upheld save to the extent that they now need to be reduced in light of the information provided by the Appellant on the RGD accounted for on MR Spins.”
Tax cases that involve the RGD of other betting providers could be reviewed hastily by their legal counsel, as the decision could cause a ripple effect for those hoping to avoid the balance due on free spins.
This could also mark a reduction in gaming promotions, such as free spin offers, if HMRC is waiting to be paid for what has long been considered a betting company’s promotional outlet.
Featured image: Canva.
The post UK tax regulator victorious in free spins ruling appeared first on ReadWrite.
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