On appeal from: [2018] CSIH 78

The Appellant (“the taxpayer”) operates bingo clubs. Customers pay a fee, which entitles them to play in a number of bingo games (collectively, a “session”).. The present dispute arises from a change in guidance given by HMRC about how participation fees should be calculated. Until 2007, the guidance stated that bingo promoters should calculate the participation fees separately for each game. In February 2007, HMRC issued Business Brief 07/07, which stated that participation fees should be calculated on a session by session basis.

The taxpayer accounted for VAT on a game by game basis until 2007. After the business brief was issued, the taxpayer made a claim under section 80 of the VAT Act for repayment of sums overpaid as a result of having used this basis of calculation; because of the time limit in section 80, the taxpayer claimed and was repaid for the previous three years only.

In 2011, the First-tier Tribunal (Tax Chamber) heard an appeal by another bingo club operator, which argued that it was entitled to make an adjustment without any time limitation. The First-tier Tribunal agreed.. In light of that case, the taxpayer in the current dispute sought to make an adjustment for the years 1996-2004. HMRC declined to accept that. The taxpayer appealed. The question for the Supreme Court was whether the taxpayer was entitled to make such an adjustment.

The Supreme Court unanimously dismissed the appeal. There was only one correct method of calculating the taxable element – which was the session by session method. In the present case, it was an agreed fact that a customer purchased a right to participate in a session of bingo. No reason was advanced for going behind the pricing policy adopted by the taxpayer. It followed that if, as a result of using the game by game basis, the taxpayer had paid more VAT to HMRC between 1996 and 2007 than if it had used the session by session method, then the taxpayer had paid tax that was not due. This means that section 80 with its three year time limit applied, so that VAT paid before 2004 cannot be recovered.

For judgment, please download: [2020] UKSC 28

For Court’s press summary, please download:  Court’s press summary

For a non-PDF version of the judgment, please visit: BAILII

To watch the hearing please visit: Supreme Court website 28 April 2020 morning and afternoon session and 29 April morning session.

To watch the judgment summary, please visit: Supreme Court website: 24 June 2020