The UK industry has been dealt another blow post Budget with the unexpected news that the Treasury plans to start changing the VAT status of machines much earlier than was originally thought.
Manufacturers were hoping for a final boost in sales before machines became VAT exempt in February 2012 and there was even talk of a UK exhibition timed for October, which would have been a perfect opportunity for operators to buy machines and claim back the VAT before the February deadline.
However, it has since come to light that the government appears to want to change the VAT status on machines from July this year, when the Budget gets Royal Assent. This would mean that during the period from July 17 to February next year that VAT claimable will only be in relation to the amount of time the machine is in operation before it becomes completely VAT exempt.
It is important to point out that at the moment the final situation is still far from clear, as BACTA pointed out in a letter to its members:
“The VAT position for recovery of input VAT from Royal Assent will impact on some supplies where the expense relates to exempt supplies after 1st February e.g. rent of premises but please note HMRC is not comprehensive in their advice, eg they do not refer to machine purchases. The only reference to the purchase of machines is to a pub group that is buying 200 machines. Firstly pub chains do not buy gaming machines. Pub managers do not pay domestic rent and HMRC appear to be confused, so we need to give them a number of scenarios and ensure there is a common understanding.”
Despite this, some in the manufacturing fraternity are pretty clear where this appears to be heading.
“This is a strategic and malicious way for the government to get at the industry. It will negatively affect sales and it will pass an extra burden onto operators to keep even more detailed accounts,” says one.
First published on Coin-op Community
