A tax tribunal has found that HM Revenue & Customs (HMRC) wrongly charged bookmakers VAT on revenue from fixed-odds betting terminals (FOBT).
The case was brought against HMRC by bookmaker, Betfred, which is understood to be in line for a £100 million rebate.
The VAT was charged on the gaming machines from 2005 until 2013, when a new dedicated tax was introduced, which now stands at 25 per cent.
VAT had been levied on top of a 15 per cent betting duty during the period in question – something which is thought to have been a major element of the bookmaker’s argument.
The tribunal found the application of VAT to FOBTs “breached the principle of fiscal neutrality,” as other games based on roulette principles did not have VAT applied to them.
HMRC has not confirmed whether or not it will appeal against the verdict.
However, a spokesperson said: “This is an important judgement and HMRC is giving it careful consideration.”
FOBTs are understood to represent more than half of bookmakers’ overall income and have featured prominently in political debate recently, following plans to cut the maximum stake from £100 to £2 – a move which has subsequently been delayed for two years.