Broadway Gaming Losses its £4.9m Tax Rebate Appeal
Broadway Gaming has been unsuccessful in appealing a decision over a £4.9m refund on gaming duty. However, the operator won over an argument on calculating free plays for tax purposes.
Bingo Operator Losses Tax Appeal © Unsplash.
Bingo and online casino operator Broadway Gaming has lost its appeal against Her Majesty’s Revenue and Customs relating to a £4.9m gaming tax overpayment.
The company, however, was successful in its claim that new betting offers such as free plays, free spins and other enticements could be used in calculating profit for remote gaming excise tax purposes.
One of the fundamental reasons for the First-tier Tribunal’s decision to dismiss Broadway Gaming’s claim was that the operator failed to provide expenditure evidence.
Broadway Gaming had previously tried to claim a gaming duty refund from December 2014 to September 2017. It argued it was entitled to claim by treating free plays as expenditure on prizes when calculating profit.
Her Majesty’s Revenue and Customs rejected Broadway’s claim, stating that the company has wagering requirements that force consumers to replay games several times before they are withdrawable; these free bets cannot be counted as an expenditure for profit reporting purposes.
The operator disagreed and launched an appeal, the basis of which was that grey areas in the Finance Act 2014 meant there wasn’t an accepted universal definition of what constitutes a prize when calculating profit levels for tax reporting purposes.
On that point, the tribunal agreed and likened it to a “chicken and egg situation” regarding turning free plays into withdrawable funds. However, they also agreed with the tax authority that free plays, once converted, could be counted for calculating profit.
The tribunal agreed with Her Majesty’s Revenue and Custom’s secondary claim that the company hadn’t submitted sufficient evidence of expenditure. It said the company’s submission of “inadequate alternative spreadsheets” was not enough for the court to accept or Her Majesty’s Revenue and Customs.
After the judgment, Broadway Gaming CEO David Butler was upbeat about the decisions and said he was pleased that the tribunal had agreed on a key aspect of the appeal, adding that the decision that went against them could quickly be resolved.
Butler said: “I am happy with the First Tier Tribunal’s decision that we were correct in using free plays as a means of calculating profit.
“Technically, we have not lost the appeal, and it is a small technical issue in terms of providing evidence that can be remedied.”
The company has avenues to appeal the tribunal’s decision but has not indicated if they intend to do so.
It has been a busy time for Broadway Gaming as their subsidiary Saphalata Holdings bought 888’s entire business to consumer and business to business bingo operations in December.
The purchase secured not only the Dragonfish-powered B2B services and 888’s B2C bingo brands but also transitional support from a dedicated 888 team.
888’s CEO Itai Pazner said in December: “The high-quality bingo business has been an important part of 888’s history, and over many years we have developed an advanced B2B offering alongside a suite of popular consumer-facing brands,” Pazner said.
“As part of an enlarged business, I am very confident that the future for the bingo business is bright. I would like to express my immense gratitude for all of the hard work of the team over the years,”
Broadway Gaming paid $50m (£37.6m) for 888’s bingo assets, a significant reduction on the $71m valuation in 888’s last accounts.
