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HMRC internal manual

Machine Games Duty

Operational: Compliance checks: business records that should be available

Machine Games Duty (MGD) legislation does not require records to be kept for each individual machine as a matter of routine. However you do have the power to direct that records for individual machines are kept if you identify compliance risks. The relevant legislation is contained within SI 1992/3150 Revenue Traders (Accounts and Records) Regulations 1992.

The operator should also keep adequate records to support and demonstrate that the figures declared on their MGD return are correct. What records should be kept will depend on the size and nature of the business, but they should ideally keep:

An MGD summary account

A daily or weekly Machine Games Duty summary account with working papers to support the MGD return declaration.

An account for cash in and out of machines

A record of cash in and out of each machine in an accounting period.

Other activities may affect the cash balance in machines and the following may therefore be recorded:

  • details of floats paid into machines and dates of top-ups
  • non-cash credits to machines
  • the level of and any changes to each machine’s ‘prize payout’.

A record of prizes given out

This should include records for:

  • Redemption operations
  • Amount paid for the prizes as this amount (VAT inclusive) can be offset against MGD. Where the operator has a single stock of prizes for machines that are and aren’t liable for MGD, there should be sufficient information to determine the value of prizes used in the MGD machines.
  • ‘Free plays’ either as a promotional free play or as a prize for playing another game.

A record of remote payments

A remote payment occurs where a player pays with cash or cheque for an operator to add credits to a machine. The operator should retain records to evidence the amount of the stake, the value of play and any payout actually made that can be offset against dutiable MGD takings.

Other payouts to customers

Operators should keep information on payouts made other than via a machine, for example where the machine had insufficient funds in the ‘hopper’. This will help to demonstrate that the payouts were actually made and can correctly be offset against dutiable MGD takings.

Computer reports

Most standard software systems will have standard reports and exception reports that can be used to determine the accuracy of the MGD declarations.

Other business records

Other business records will be kept such as cash books, profit and loss accounts, balance sheets and bank statements. The primary records of a business provide an invaluable tool for assessing the accuracy of the Return. More information on record examination can be found in the Enquiry Manual