The treasury have introduced a consultation process to reform taxation on Gaming Machines. After the latest fiasco with the increase in bingo duty, the Government are now keen to enter into dialogue with operators of gaming machines in a bid to avoid the backlash it has received from the bingo sector.

Many UK bingo clubs operate gaming machine and often represents over 30 percent of a bingo club's profit. Secretary to the Treasurer, Sarah McCarthy-Fry announced the publication of a consultation document available on the Treasury website.

As major stakeholders this is a process that has been welcomed by the Bingo Industry many of which are asking why this process was not put out to the bingo industry when considering the new rate of bingo duty for bingo operators. Still it does look like the Treasury have learned from their last mistake and will make the consultation period open for comments and input until 23rd October 2009 and have stated this will give time for industry stake holders to make representations.

The statement by Sarah McCarthy-Fry is as follows, "I am publishing a consultation on the future of gaming machines tax policy, copies of which have been placed in the House library. Following reforms to gambling taxation over the last decade, five of the seven gambling tax regimes are now calculated on a gross profits basis. Gaming machines face a combination of amusement machine licence duty (AMLD), a licence fee paid before a gaming machine may be made available to play, and VAT at the standard rate on their takings. Taxing on the basis of gross profits has been a success for other gambling regimes. The Government is considering whether to base the taxation of gaming machines on to the same basis, and wishes to hear from interested stakeholders."

The principal of gross profits tax for gaming machines is a simple and fair system but it will depend on the level of machine duty set will determine the satisfaction of the stake holders. Stake holders will probably welcome a 15 percent tax on profits, but since the decision with Bingo, this is unlikely to be announced. A major hurdle is the fact that profits are at the moment subject to VAT which can be claimed back against the machine purchase or rental. Replacing it with GPT will mean that VAT is no longer reclaimable and could bring problems to machine manufacturers.