Machine Gaming Duty
Machine Gaming Duty (MGD) is a tax on gaming machines, introduced on 1 February 2013. MGD replaced both Amusement Machine Licence Duty (AMLD) and VAT on gaming machine takings. HM Revenue & Customs (HMRC) has issued guidance on the operation of MGD, the key points of which are summarised below.
There are two rates of MGD: a standard rate and a lower rate.
Unlike VAT, MGD is calculated in addition to net takings, rather than being included within them. For example, where net takings are £100, MGD at 20% would be £20. By contrast, under VAT rules, a VAT-inclusive amount of £100 would equate to VAT of £16.67.
MGD is charged on the net takings from the playing of dutiable machine games. For these purposes, net takings are calculated by deducting winnings paid out from stakes received.
Where a club is responsible for more than one gaming machine, losses on one machine may be offset against profits from another. Any overall losses may be carried forward to the next accounting period.
Higher rate (20%)
Lower rate (5%)
Exempt
Gaming machine income is exempt from VAT. In a limited number of cases, for example, where a club has undertaken major refurbishment, this exemption may affect the club’s ability to recover VAT on gaming machine rental and maintenance costs.
This is a complex area and, where there is any doubt, professional advice should be sought.
Where a relevant licence is held for the premises on which a dutiable machine game is made available for play, the licence holder is required to register with HMRC and account for MGD. In practice, this means that the club, rather than the machine supplier, is responsible for the payment of MGD.
This remains the case even where the club has entered into a profit-sharing arrangement with the machine supplier.
An application for registration for MGD must be made to HMRC before gaming machines are made available for play.
HMRC maintains a public register of MGD-registered premises, accessible via a free online lookup facility. Searches are carried out by postcode and display the addresses of registered premises.
MGD returns are normally required to be submitted online, although paper returns may be accepted in limited circumstances. Payment may be made by direct debit, BACS or CHAPS.
The standard accounting period is three calendar months, and returns must be submitted within one month of the end of the accounting period.
Clubs are required to maintain adequate records to support their MGD returns and the amounts declared for payment.