It has been reported that Rank, owners of the Mecca Bingo and Grosvenor Casinos brands has received the £42.5m in overpaid VAT from HM Customs and Revenue. The refund covers VAT on main session bingo fees of £16.1m from 2004 until 2009 and VAT paid on amusement machines of £26.4m from 2002 until 2005.

The repayment covers VAT paid on games of main stage bingo - £16.1m between 2004 and 2009 - and amusement machines - £26.4m between 2002 and 2005. The repayment is the result of a number of successful rulings in the Tribunal Tax Chamber and the High Court.

Rank had claimed the VAT obligations contravened the European Union principle of fiscal neutrality. This breach of fiscal neutrality occurred because jackpot machines which were subject to VAT and other similar machines, such as fixed odd betting terminals which were not subject to VAT, before 2005.

The tribunal found that the machines were similar and that as a result the jackpot machines should not have been subject to VAT.

This was the second case that Rank had challenged HMRC in. The first case was in relation to the double taxation on bingo fees that bingo clubs had faced. Operators had to pay both VAT and bingo duty on the fees taken in bingo. Mecca claimed that VAT should not be charged.

Deloitte the company that had played a vital role in providing advice for Rank in relation tothe cases were always expecting the outcome. A Senior Tax Partner for the company, Tony McClenaghan commented: "This is a very welcome decision following on from earlier victories at the Tribunal and in the High Court. We have always been confident that there was a breach of fiscal neutrality in the differential treatment of the relevant gaming machines and we welcome the Tribunal's confirmation of this fact. Taxpayers affected by this decision should now consider making claims for overpaid VAT."

The tribunal found that there was no defence of due diligence available to the UK for a breach of fiscal neutrality but, even if there had been, on the facts of this case the UK had not acted with due diligence.

While it is unlikely to be successful HMRC have appealed the rulings to the Euorpean Court of Justice which is expected to be heard in 2011. If the the appeal was succesful Rank would have to return the repayment and would be ordered to pay interest as well.