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Finance Act 2012

Background Note

79.This measure aims to put tax revenues from gaming machines on a more sustainable footing. The VAT treatment of gaming machines has been challenged in the Courts. Introducing MGD and exempting dutiable machine games from VAT will protect tax revenues going forward, and will ensure that operators of gaming machines continue to make a fair contribution to tax receipts.

80.MGD also supports the Government’s objective of a fairer tax system by ensuring the taxation of dutiable machine games will be more closely linked to machine takings.

81.MGD will be charged on the net takings from games played on machines where those games offer the player the opportunity to win a cash prize whose value is greater than the cost to play the game once.

82.The rate of MGD that is charged will depend on the maximum cost to play a single game and the maximum cash prize offered for a single game.

83.The standard rate of MGD will be charged at 20 per cent on the takings of dutiable machine games where the maximum cost to play a single game is more than 10p or the maximum cash prize offered for a single game is more than £8. The lower rate of MGD will be charged at 5 per cent on the takings from other dutiable machine games. If a single machine offers games in each category, all of the takings will be charged at the standard rate.

84.If a single machine offers a mixture of dutiable machine games and other services or facilities, only the takings from the dutiable machine games will be liable to MGD.

85.The introduction of MGD and the replacement of AMLD will apply to the playing of machine games from 1 February 2013 and Regulations will be made to allow people to register for MGD before then. The VAT changes will apply to supplies made on or after 1 February 2013.

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