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HMRC internal manual

VAT Betting and Gaming Guidance

Machine games: treatment of tokens and prizes awarded from machines: exchange of tokens for cash in machine by trader

It is common practice for some traders to exchange tokens that they have accepted in return for goods for cash from machines when they are opened. This is acceptable provided that:

  • VAT has been declared upon the value of the tokens when accepted as payment for goods supplied in return
  • no deduction is made from the machine takings in respect of coins replaced by tokens.

Ideally, the trader should be required to calculate and record the machine’s takings before any such exchange occurs. This will restrict the opportunity for reduction of the machine’s cash takings by such exchanges.