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HMRC internal manual

VAT Betting and Gaming Guidance

Lotteries: lottery law

European law

Exemption for lotteries is specifically provided for by Article 135(1)(i) of the Principal VAT Directive which reads:

(i) betting, lotteries and other forms of gambling, subject to conditions and limitations laid down by each Member State;

UK law

Schedule 9, Group 4, Item 2 of the VAT Act 1994 provides for exemption for:

The granting of a right to take part in a lottery.

The exemption essentially covers the sale of the lottery tickets to the public, as these acknowledge that a right to participate has been granted to the participants.