VAT – Cash Bingo: Accounting for VAT on participation and session fees

This briefing is about participation and session fees paid by cash bingo players. It clarifies HM Revenue & Customs’ policy on how to calculate those fees for VAT purposes.

Background

Participation and session fees charged for taking part in bingo played for cash prizes on premises licensed or registered under Part II of the Gaming Act 1968 (sometimes termed “mainstage” cash bingo) are consideration for standard - rated supplies. Stake money-the amount risked by the player, all of which must be returned as winnings - is not payment for a supply and so is outside the scope of VAT.

Where participation and session fees and stake money are received together in one composite amount charged to players, bingo promoters must work out how much of the payment is stake and how much is the participation and session fee in order to determine how much VAT is due. Section 3.2 of Notice 701/27 Bingo explains how to do this.

We have received enquiries from some bingo promoters performing the VAT calculation on a game-by-game basis, asking whether they are acting correctly and these have prompted the issue of this clarification.

Calculating the VAT due

When a player pays to participate in all or part of a bingo session, the supply made by the promoter is the right to participate in the number of games during that session for which they have received payment. As a player cannot participate in further sessions unless they make further payment, the supply to the player is completed when the session ends. In these circumstances the amount of VAT due on participation and session charges should properly be calculated on a session-by-session basis by deducting the stake money arising in each individual session from the total amount (less any admission fees) paid by players to participate in that same session. Where money from other sources is added to the stake money received in the session in order to meet guaranteed prizes, that additional money cannot be used to reduce the value for VAT of the participation and session charges paid for taking part in that session.

Where a player pays to take part in an additional game (“flyer”) that does not form part of the session charge, this is a separate supply of the right to participate in that further game. The VAT due on fees charged for participating in additional games should be calculated on a game-by-game basis.

Where a promoter provides facilities for participating in linked games or a national game, in which players located at more than one venue all participate in the same game, charges received at all the promoter's participating venues should be aggregated in order to calculate the amount of VAT due on par fees relating to the linked game or national game.

Promoters should not perform a single calculation for the whole of each VAT return period, aggregating stake money and receipts taken for all bingo played during that time.

Notice 701/27 Bingo will be updated.

Making claims or adjustments

Bingo promoters that have calculated the VAT due on participation and session charges on a game-by-game basis, and who now find that they have done so incorrectly, may make a claim to HMRC for a repayment of any resulting overdeclaration, subject to the conditions set out in Notice 700/45 How to correct VAT errors or make adjustments or claims. In particular, businesses should note that:

• where the total of previous errors does not exceed £2000 net tax, an adjustment may be made to your current VAT return; but
• where the total of previous errors exceeds £2000 net tax a separate claim should be submitted to HMRC (in these cases the errors must not be corrected through your VAT returns).

HMRC may reject all or part of a claim if repayment would unjustly enrich the claimant. More information about unjust enrichment can be found at part 14 of Notice 700/45.

Advice about where to send your claim can be obtained from HMRC's National Advice Service.

Issued 01 February 07.