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HMRC internal manual

VAT Betting and Gaming Guidance

Machine games: treatment of tokens and prizes awarded from machines: non-replayable tokens

Non-replayable tokens are ones that are awarded by machines but which cannot be used to play them. There are very few machines that award these as prizes nowadays. Their treatment for VAT purposes depends upon whether or not they have a recognised cash value. Non-replayable tokens have a recognised cash value when it is possible to exchange them for cash or goods that a trader also sells. They have no recognised cash value when they are only exchangeable for goods that are not also sold by the trader.

Valuation of non-replayable tokens with recognised cash value

These are to be treated in exactly the same way as replayable tokens. When these tokens are exchanged for goods also sold by the trader, this should be treated in the manner set out in VBANDG13150.

Valuation of non-replayable tokens with no recognised cash value

VAT treatment differs when non-replayable tokens can only be exchanged for goods which a trader does not sell to the general public. No deduction should be made from a machine’s takings in respect of any of the following:

  • tokens awarded by the machine
  • tokens used to restore the machine’s float
  • prizes given in exchange for the tokens.

Therefore, the machine’s takings will be determined solely by its cash takings. If it is a machine that only awards non-replayable tokens, the taxable takings will be all the cash that players have put into the machine. If it is a machine that awards both cash and non-replayable tokens, the takings should be split between exempt and taxable supplies.

When these tokens are exchanged for goods, however, a trader is not required to account for VAT upon the exchange transaction. VAT has already effectively been accounted for on the value of the goods because there has been no reduction of the machine’s taxable take to allow for this.