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HMRC internal manual

VAT Betting and Gaming Guidance

"Relevant machine games": accounting for VAT on "relevant machine game" takings: basis of valuation of relevant machine game takings

Section 23 of the VAT Act makes specific provision for the basis for valuing supplies involving “relevant machine games.” Section 23(1) provides that the amount paid by a player of a relevant machine game” is to be treated as the consideration for a supply of services. However, section 23(3) and (4) provides that the value to be taken as the value of supplies made by a person (“the supplier”) in any period is to be determined as if the consideration for the supplies were reduced by an amount (if any) paid out in that period by way of winnings in respect of relevant machine games. In other words, the value is all the money used to obtain play of the machine by the players less anything that has been returned as winnings. It should be remembered that although this will normally mean coins or tokens actually inserted into a machine by a player less those paid out by it, the consideration provided for use of the machine does not have to be limited to that form for section 23 to apply.

Alternatively, the player may give cash to the machine operator who clocks up credits on the machine, or the player may use a card which is similar to a credit or phone card. The valuation provision of section 23 of the VAT Act establishes the basis for the taxable takings calculation discussed in VBANDG12200.

In most cases, the value of the supplies will be the gross takings, as more often than not there are no cash prizes for relevant machine games.