In Coyles Millar v HMRC [2021] TC08355, the First Tier Tribunal (FTT) found that a four-year time limit applies to repayments of overpaid Machine Games Duty (MGD).

  • On the introduction of Machine Games Duty (MGD) in 2014, Coyles Millar was unclear how duty would operate in respect of free plays on gaming machines.
    • Free plays were offered as a form of promotion. There was concern that coins that were gifted to players may attract duty.
  • HMRC were twice contacted for advice by letter but no reply was received. This was taken as an indication that the free play incentives were dutiable: MGD was declared by Coyles Millar accordingly.
  • Coyles Millar reviewed the position again in 2017, and in June 2019 wrote to HMRC asking for clarification. This letter stated that if a refund was due, it should be taken as an application for repayment.
  • HMRC subsequently confirmed that the free play incentives should not be included in net takings upon which duty was calculated.
    • This meant that between 31 March 2014 and 31 March 2018, Coyles Millar had overpaid MGD totalling £85,823.
  • HMRC advised that repayment would be restricted to a period of four years prior to the date of the repayment claim in June 2019.
    • On Review, this was amended to include the entire quarter that spanned the date four years prior to the repayment request.
    • This four-year limit restricted the repayment due to Coyles Millar to £45,676.
  • Coyles Millar Appealed to the First Tier Tribunal (FTT).

The FTT dismissed the taxpayer’s appeal, finding that under section 137A Customs and Excise Management Act 1979 a four-year time limit applies to repayments of overpaid duty.

  • The FTT were surprised that, given the significant numbers involved, further advice was not sought following HMRC’s initial silence. It was the duty of Coyles Millar to get its tax affairs right.
  • No legitimate expectation could be established from HMRC’s non-reply to the 2014 letters.

Useful guides on this topic

Machine Games Duty (MGD)
Machine Games Duty (MGD) has applied since 1 February 2013, when it replaced VAT and Amusement Machine Licence Duty (AMLD) charged on the income from gaming machines.

R & C Brief 12 (2021): VAT treatment of gaming machines: 6 December 2005 to 31 January 2013
HMRC have issued Revenue and Customs Brief 12 (2021): VAT treatment of gaming machines from 6 December 2005 to 31 January 2013. It sets out how customers with appeals related to the VAT treatment of gaming machines during this period can claim VAT refunds.

How to appeal an HMRC decision
Disagree with a HMRC decision? How to appeal, what type of decision can you appeal and what are your different options when you disagree with HMRC? What are the key steps in making an appeal?

Statutory Review (by HMRC)
What is a Statutory Review? Is it automatic? What happens in a Statutory Review? Can you challenge a Statutory Review's findings? Can you influence a Statutory Review? 

External link

Coyles Millar v HMRC [2021] TC08355


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