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This publication is available at https://www.gov.uk/government/publications/excise-notice-458-lottery-duty/excise-notice-458-lottery-duty
This notice cancels and replaces Notice 458 (June 2011). Details of any changes to the previous version can be found in paragraph 1.2 of this notice.
1. Introduction and basic information
1.1 What this notice is about
- who has to account for Lottery Duty
- whether your lottery is liable to duty
- how you register, including the conditions you must comply with
- what records and accounts you must keep
- how to calculate the duty and make returns and payments
Nothing in this notice overrides the law.
You’re reminded that in addition to Lottery Duty, (which is under the care and management of HM Revenue and Customs (HMRC)) you also need to comply with the social law which is the responsibility of the Gambling Commission and National Lottery Commission.
1.2 What’s changed
This notice has updated record keeping requirements (see paragraphs 7.2, 7.4 to 7.6 and 7.8).
1.3 The Gambling Act 2005
It governs the operation of exempt lotteries and currently contains separate requirements for both operating and premises licences. If you have any queries about this law, please consult the:
1.4 The National Lottery etc Act 1993
This governs promoters who are holders of a section 5 or section 6 licence to run the National Lottery. If you have any queries about this law you should contact Gambling Commission.
1.5 Overlap with social regulatory law
It is the Lottery Duty legislation which determines the duty treatment. All the gambling duties are self assessed taxes and a taxpayer is obliged to calculate, notify, and pay any duty due. If a taxpayer has queries about their Lottery Duty they should refer to guidance issued by us.
We’ll answer individual queries from taxpayers. If we give a ruling, then in some circumstances a taxpayer is entitled to rely on that ruling even if it is later shown to be wrong. However, a taxpayer isn’t entitled to rely on an opinion, or any guidance written by the social regulator, such as the Gambling Commission, even if the opinion relates to an identical piece of legislation.
There is no liability to VAT on the sale of a ticket or chance in the lottery. For further information on the VAT treatment of lotteries please refer to Notice 701/29: betting, gaming and lotteries.
2. About the duty
2.1 What Lottery Duty is
This is a duty on taking a ticket or chance in a lottery that is promoted in the UK, unless specifically exempt. However, most lotteries, except the National Lottery, are exempt from the duty.
2.2 Rate of Lottery Duty
It is 12% of the cost of a ticket or chance to win a lottery. You can check the rate on GOV.UK website, or phone the Excise helpline on Telephone: 0300 200 3700.
2.3 Exempt lotteries
The Gambling Act 2005 states that all lotteries are unlawful except certain specified lotteries. It is these lawful lotteries that are exempt from duty. These include exempt lotteries listed within Schedule 11 of the 2005 Act:
- incidental non-commercial lotteries - commonly held at charity fund raising events, such as a bazaar, a fete, sporting or athletic event, dinner, etc. This will cover lottery tickets sold at football club annual dinners, Brownie fund raising events, etc. They must be promoted wholly for a purpose other than private gain
- private lotteries - only members of the society, or those people on the society’s premises, can take part in the lottery
- work lotteries - only people who all work on the same premises may take part. This would cover office sweepstakes, office party raffles, etc
- residents lotteries - only people who live at the same premises may take part
- customer lotteries - only customers at the business premises may take part
- society lotteries - for the benefit of a non-commercial society which is established and conducted for charitable purposes
- participation in, or supporting sport athletics cultural activities, or any other non-commercial purpose, other than private gain
- local authority lotteries - promoted by local authorities, which must comply with the licensing conditions, set out in 98 and 99 of the 2005 Act
2.4 Prize competitions and lotteries
There are competitions which combine a mixture of skill and chance. If the element of chance becomes too great then the scheme as a whole could be found to be a lottery, as success does not depend to a substantial degree on the existence of skill. An obvious example is a competition that requires participants to answer one or more questions which most of the participants would get right. The names of the participants answering the questions correctly then go into a draw to decide the winner. If the scheme is found to be a lottery, and it does not fall within the exemptions to Lottery Duty specified in Section 24(4) of the Finance Act 1993, it is likely to be regarded as a chargeable lottery. This type of lottery would be liable to Lottery Duty at the rate of 12% of the value of the consideration given for the ticket or chance.
2.5 Unlawful lotteries
An unlawful lottery isn’t exempt from Lottery Duty and so is chargeable with duty at the current rate (see paragraph 2.2). The requirement to pay Lottery Duty does not make the lottery lawful.
3.1 Whether you should register for Lottery Duty
If you’re the Section 5 licence holder as specified in the National Lottery etc Act 1993 for the National Lottery, or you’re running a lottery that does not qualify under the exemptions detailed in Section 24(4) of the Finance Act 1993 you should register for Lottery Duty. Brief details of the exemptions are contained in paragraph 2.3.
Any person who runs a chargeable lottery without being registered with HMRC is committing an offence.
3.2 When you should apply for registration as a lottery
|promote a lottery which is liable to Lottery Duty,||must notify us of your intention to trade at least 15 days before the commencement of the first chargeable lottery.|
|are a Section 6 licence holder,||aren’t required to register, as the Section 5 licence holder will be registered with us.|
The Section 5 licence holder is responsible for payment of all duty on National Lottery games, but Section 6 licence holders and others associated with the promotion of any lottery should see paragraphs 7.1 and 7.6.
3.3 How you apply for registration as a lottery promoter
To register, you must complete form Gambling duties: application to register as a lottery promoter (BD601) which you can either:
- fill in on-screen, print off and post to HMRC
- complete online, by signing into, or setting up, a Government Gateway account
If you don’t already have a Government Gateway account, all you need to do is go to the website and follow the simple steps to apply as an organisation, or an agent, as appropriate.
HMRC encourages applications for registration through the HMRC Online Services. Not only is there more help to complete the application correctly, the information you see is tailored for you, so it is quicker and easier to apply.
When your registration has been processed, you’ll be given a reference number, which you should quote whenever you contact us about Lottery Duty.
If however you do choose to send in your registration application by post, you must send it to the Excise Processing Teams.
You must submit your registration application at least 15 days before you intend to promote a chargeable lottery.
3.4 Conditions you have to fulfil in order to be registered or stay registered
|Section 5 licence holder for the National Lottery:||you must hold, and continue to hold, a valid licence issued by the National Lottery Commission.|
|All promoters:||must give security for the duty if we ask you to do so (see paragraph 3.6), and|
|once registered you must comply with all our requirements to make your returns and payments on time.|
3.5 What trading changes you must tell us about
You should advise the NRU in writing (see paragraph 3.3), of any changes to the material details shown on your registration application. For example:
- name of promoter
- address for correspondence
- registered address or
- ceasing to trade
3.6 Financial security
We may ask you to provide suitable financial security to cover your potential liability. We’ll consider each application on its own merits. We may not initially require security, but if circumstances change, we may ask you to provide security at a later date.
If you fail to provide adequate security we may cancel your registration. This will mean that you’ll no longer be able to promote chargeable lotteries. If you do, you’ll be committing an offence.
3.7 Cease trading
Tell the Cumbernauld Accounting Team (CAT) at the address below as soon as you know your last day of trading:
St Mungo's Road
We’ll then take appropriate action to:
- obtain your final return and payment
- to deregister you, and
- to release any security that is no longer required
3.8 Failure to notify
You could be charged a penalty if you fail to apply for registration before promoting a chargeable lottery, or notify HMRC of any business changes at the right time.
This new penalty regime applies when the obligation to notify arises on or after 1 April 2010.
For further information on the failure to notify penalty please see Compliance checks: penalties for failure to notify - CC/FS11.
4.1 Whether duty is due on commissions, discounts and similar
Duty is due on the full price paid or payable, before deduction for any expenses or commission, for example.
4.2 When duty becomes due
At the time the ticket or chance is taken.
Special rules apply for games promoted under Sections 5 and 6 of the National Lottery etc Act 1993, which form part of the National Lottery.
5. Calculate the duty due
5.1 How to work out how much duty you’ll pay
Duty is 12% of the following:
- all stake money paid in the accounting period, before deduction of expenses (including commissions)
- stake money payable, but not yet received, on any tickets or chances taken in the accounting period
You could be liable to Lottery Duty even before the lottery has closed or been drawn.
5.2 If you promote the National Lottery
If you’re the promoter of the Section 5 National Lottery game special rules apply. The duty is 12% of the following:
- all stake money paid in the accounting period, before deduction of expenses (including commissions), for all draws which have taken place in that accounting period
- stake money payable, but not yet received, on any tickets or chances taken against draws that have already taken place in the accounting period
5.3 Work out how much duty to pay on predetermined tickets or chances
In the case of tickets or chances, where, before it is taken, it has determined whether or not it will win (for example scratch cards) the rule described below in paragraph 6.1 will apply.
6. Returns and payments
6.1 How to account for the duty
You must account for duty using the return form BD600. A single return covers all chargeable lotteries promoted by one promoter within the period of the return. In the case of the National Lottery, it covers all lotteries run by all Section 6 licence holders within the period of the return.
6.2 Accounting period
Each return covers a period of 4 or 5 weeks ending on the last Saturday of each month. However, if your accounting periods are different, for example ending on the last Sunday of each month, we may let you vary the period covered by the return.
To get approval for non-standard accounting periods, you’ll need to apply to CAT. There must be 12 accounting periods in each year, and no period must exceed 5 weeks. Send your application in writing to:
St Mungo's Road
6.3 How you get your duty returns
You must complete the return form Lottery Duty: send your online return (BD600).
The easiest and quickest way to submit your return is through the HMRC Online Services. To do this you’ll need to have enrolled for the HMRC Online Service via your Government Gateway account.
If you don’t already have a Government Gateway account, all you need to do is go to the website and follow the simple steps to apply as an organisation, or an agent, as appropriate.
HMRC encourages you to file your returns online. If you complete an online return you’ll have access to online help which will make it easier to complete. You can also be confident that your completed return won’t get lost in the post, and if you give your email address you’ll receive an email confirming receipt of your return.
6.4 When your return and duty payment must be sent in
You must submit the return to reach HMRC by the 13th day following the end of the accounting period to which the return relates. You must submit the return even if you haven’t carried on business during that accounting period.
Where payment of any Lottery Duty is deferred it must be paid:
- either by Clearing House Automated Payment System (CHAPS) or the Bankers Automated Clearing Services (BACS)
- on or before the return due date
6.5 How you pay the duty
You can pay by BACS Direct credit Internet/Telephone banking or CHAPS. You’ll need to supply your bank or building with the following details:
- sort code: 08-32-00
- account number: 12000911
- account name: HMRC GACA
- payment amount
- your lottery reference number
Make sure you show your unique Lottery Duty reference number on your return form, so it can be correctly linked with your electronic payment.
6.6 Who has to pay the duty
The promoter of the lottery should normally pay the duty. However, for the National Lottery, the Section 5 licence holder is responsible for payment of all duty on National Lottery games including those promoted by Section 6 licence holders.
6.7 Who can HMRC collect unpaid duty from
We’ll normally pursue the lottery promoter responsible for promoting the lottery. But we can also take civil proceedings for recovery of the unpaid duty from:
- sub-contractors, Section 6 licence holders and agents involved in promoting a lottery
- anyone involved in any capacity in the management of a lottery
- anyone who has any degree of control over any of the proceeds of the lottery (this would include retailers who sell the tickets or chances)
- in the case of a body corporate, any director will be personally liable jointly and severally with that body corporate
6.8 Other action HMRC can take if duty remains unpaid
If you’re licensed by the National Lottery Commission, we may inform them of the situation and ask them to review the renewal of your licence. We may also exchange information relating to lotteries and lottery promoters with the Director General of the National Lottery, the Department for National Heritage and the Gambling Commission.
6.9 Mistake on a return
You could be charged a penalty if don’t take reasonable care with your tax affairs.
We can charge a penalty if your return or other tax document is inaccurate and as a result you don’t pay enough duty, or if you don’t tell us a duty assessment we have sent to you is too low.
This new penalty regime applies to return periods commencing on or after 1 April 2010.
For further information on the inaccuracy penalty please see our website.
6.10 How can to avoid a penalty
You can avoid a financial penalty by checking that you’ve given complete and accurate information in your return.
If you’re aware you have made a mistake on your return, please tell us as soon as possible. We’ll be able to reduce the penalty, in many cases to zero.
You have the right to appeal if we impose such a penalty.
For further information on both penalties and appeals please see the HMRC website.
7. Records and accounts
7.1 Reference for lottery tickets/chances
All lottery tickets or chances in each lottery game must show a unique reference. The price of the ticket or chance must also be shown on the ticket or chance.
7.2 Whether to destroy unused lottery tickets/chances
You must give 7 clear days’ notice that you plan to destroy tickets/chances and include a list of all their unique references. HMRC will advise you where to send this notification.
At the end of 7 days, you may destroy them without further notice or formality.
Note - if you’re a Section 6 licence holder, the Gambling Commission may impose further restrictions as part of the licence conditions. You should consult with the Gambling Commission before making any moves to dispose of or destroy unused tickets/chances (see paragraph 1.3).
7.3 Records that must be kept
You must keep suitable books and records to work out the duty due and to allow us to check the duty. The law does not lay down the exact form these books and records should take, but we have powers to say what form they must take if we consider this necessary. For further information you can see Notice 206: revenue trader’s records or phone the Excise: enquiries helpline.
7.4 The law on record keeping
The Revenue Traders (Accounts and Records) Regulations 1992 covers all general record keeping requirements for any revenue trader dealing in financial transactions that are liable to Excise Duty. Regulations 6 and 8 give us the legal power to include in a notice any additional records you must keep and for how long.
The shaded paragraphs below have the force of law.
7.5 Additional records to keep
The following rules have the force of law made under Section 6 of the Revenue Trader’s (Records and Accounts) Regulations 1992.
(1) Section 5 licence holder of the National Lottery
The lottery promoter must keep a record of:
- all Section 6 licence holders promoting National Lottery games
- the total sales made by each vendor, in each game
- the duty due on those sales
(2) All other lottery promoters:
(2.1) They must keep stock accounts showing the unique reference of lottery tickets or chances (where these are pre-printed):
- in stock
- taken from stock
- returned to stock
(exclude tickets that are only printed at the point of sale).
(2.2) Make entries no later than 48 hours after the accountable event.
(2.3) Complete a duty account showing the build up to the total duty liability.
These requirements are in addition to any that the Gambling Commission may require under your licence in respect of accounts and records.
7.6 How long to keep you records
The following rule has the force of law made under Regulation 8 of the Revenue Traders (Accounts and Records) Regulations 1992.
Anyone involved in promoting a lottery, or selling lottery tickets must preserve all records and accounts for a period of 4 years starting on the day this obligation arises.
7.7 Whether records can be kept on a computer
The law doesn’t say how you must keep your records. You can keep them on a computer or any storage device (such as disk, CD, memory stick or microfilm) as long as the method you use:
- captures all the information on the document (front and back)
- allows the information to be presented to us in a readable format, if we need to see it
For more information see keeping records for business - what you need to know. These requirements do not cover any that the Gambling Commission may require under your licence.
7.8 Where you should keep your records
You’ll need to keep all records that relate to, or are used to compile your Lottery Duty accounts at your principal place of business.
Anyone concerned with the sale of lottery tickets should keep their lottery records at their main business address.
8. Reviews and appeals
8.1 Appeal against decisions made by HMRC
You have the right to ask us for a review, or appeal directly to an independent tax tribunal, on certain decisions we make about your business. Some of these include:
- a person’s liability to an assessed amount of duty
- a person’s liability to pay an assessed amount of duty
- the issue of civil penalties
If you do not agree with a decision, you can:
- ask for it to be reviewed by an HMRC officer not previously involved in the matter, or
- appeal to an independent tribunal
If you choose to have a decision reviewed you can still appeal to the tribunal after the review has finished.
8.2 Time limit to ask for a review or an appeal
If you want us to review a decision, you must write to the person who issued the decision letter within 30 days from the date of that letter. We’ll complete our review within 45 days, unless we agree another time with you. We won’t take any action to collect the disputed tax while the review is being carried out.
If you want to appeal to the tribunal you should send them your appeal within 30 days of the date of the decision letter.
8.3 What you must include in your appeal letter
Your written request should set out clearly the full details of your case, the reasons why you disagree with us and provide any supporting documentation. You should also state what result you expect from our review.
8.4 Further information
You can find further information about appeals and reviews on the GOV.UK website or download a copy of our factsheet HMRC1: HM Revenue and Customs decisions - what to do if you disagree by using the links provided or phone the Excise helpline on Telephone: 0300 200 3700. If you want to find out more about the Tribunals Service or you can phone them on Telephone: 0845 223 8080.
|Accounting Period||Period ending on the last Saturday of each month.|
|Chargeable Lottery||A lottery that is subject to Lottery Duty.|
|Financial Security:||This may be in the form of a cash deposit or a Guarantee with an approved Financial Institution.|
|Promoter||In relation to a lottery, the person responsible for the conduct of the lottery. Usually this will be the person to whom winners will look for payment of prizes.|
|Section 5 licence holder||The body corporate licensed under Section 5 of the National Lottery etc Act 1993 by the National Lottery Commission to run the National Lottery.|
|Section 6 licence holder||A person or persons licensed under Section 6 of the National Lottery etc Act 1993 by the National Lottery Commission to promote or run lotteries for the National Lottery.|
Your rights and obligations
Your Charter explains what you can expect from us and what we can expect from you. For more information go to Your Charter.
Comments or suggestions
If you have any comments or suggestions to make about this notice, please write to:
Gambling Duties Team
Excise, Customs, Stamps and Money
3W, Ralli Quays
3 Stanley Street
Please note this address isn’t for general enquiries. For your general enquiries please phone our helpline on Telephone: 0300 200 3700.