Finance (No. 4) Bill

Session 2010 - 12
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Finance (No. 4) Bill

Finance (No. 4) Bill
Schedule 24 — Machine games duty
Part 1 — Imposition of duty
541

      (7)
For the meaning of “relevant machine” in relation to a taxable person and an
accounting period, see paragraph 50.
Net takings per machine
7     (1)
A taxable person’s net takings in an accounting period for a relevant
machine are—
5
(a)
the takings, less
(b)
the payouts.
      (2)
The takings are the charges that become due at any material time from
players for playing dutiable machine games on that machine (irrespective of
when the games are played or the prizes are paid out).
10
      (3)
The payouts are the prizes (whether cash or non-cash) that are paid out at
any material time to players as a result of playing dutiable machine games
on that machine (irrespective of when the games are played or the charges
become due).
      (4)
Sub-paragraph (3) does not include prizes paid out to—
15
(a)
a person who is a registrable person in respect of the premises where
the machine is located,
(b)
a representative or employee of such a person at those premises, or
(c)
a person acting for or at the direction of a person within paragraph
(a).
20
      (5)
Sub-paragraph (3) does not include prizes paid out unlawfully (for example,
a prize paid out to a child or young person in breach of a condition attached
to an operating licence by virtue of section 83(1)(b) of the Gambling Act
2005).
      (6)
If it is not reasonably practicable to attribute charges and prizes to dutiable
25
machine games or to apportion them between dutiable machine games and
other games or other activities, any attribution or apportionment is to be
done on a just and reasonable basis.
      (7)
“Material time” means any time in the accounting period when the person is
liable for machine games duty in respect of the machine.
30
      (8)
The Commissioners may by regulations make provision about the point in
time at which a charge is taken to become due, or a prize is taken to be paid
out, for the purposes of this paragraph.
      (9)
If a machine game is played in pursuance of an offer that permits the player
to pay nothing or less than the charge that the player would be required to
35
pay without the offer, the charge (if any) is treated as becoming due when
the player plays the game.
     (10)
A prize that is paid out using a system involving redemption tickets, points
or anything similar is taken to be paid out when the prize is redeemed
(rather than when the means of redemption is issued or communicated to
40
the winner).
     (11)
Sub-paragraphs (9) and (10) do not limit the power in sub-paragraph (8).
8     (1)
In calculating the takings and the payouts under paragraph 7, the following
amounts are to be left out of account—

Finance (No. 4) Bill
Schedule 24 — Machine games duty
Part 1 — Imposition of duty
542

(a)
amounts arising from playing dutiable machine games on a domestic
occasion, and
(b)
amounts arising in any other circumstances specified by the
Treasury by order.
      (2)
The power in sub-paragraph (1)(b)—
5
(a)
may be exercised generally or in relation to particular cases or kinds
of case, and
(b)
may include provision requiring specified conditions to be met
before amounts are left out of account.
The rates
10
9     (1)
The standard rate is 20%.
      (2)
The lower rate is 5%.
      (3)
If a rate changes during an accounting period—
(a)
the old rate is to be applied to the person’s total net takings in the
part of the period before the change, and
15
(b)
the new rate is to be applied to the person’s total net takings in the
part of the period after the change.
      (4)
If it is not possible to identify for the purposes of sub-paragraph (3) the part
of the period to which an amount relates, it is to be apportioned on a just and
reasonable basis.
20
Negative amounts of duty
10    (1)
If the calculation of the amount of machine games duty for which a taxable
person is liable for an accounting period results in a negative amount
(“amount X”)—
(a)
the amount of machine games duty for which that person is liable for
25
that period is treated as nil, and
(b)
the amount of duty for which that person is liable for the next
accounting period is to be reduced by amount X.
      (2)
Sub-paragraph (1) applies to an accounting period whether or not amount X
results wholly or partly from the previous application of that sub-
30
paragraph.
      (3)
Subject to any reduction required by sub-paragraph (1)(b), the person is not
entitled to any repayment or refund of machine games duty in respect of
amount X.
Who is liable
35
11    (1)
A person is liable for machine games duty in respect of a machine at any
time if at the time—
(a)
the person is responsible for the premises where the machine is
located (see paragraph 12),
(b)
the machine is available there for use by others for playing dutiable
40
machine games on it, and
(c)
the machine is not an excluded dual-use machine (see paragraph 13).

Finance (No. 4) Bill
Schedule 24 — Machine games duty
Part 1 — Imposition of duty
543

      (2)
If, at any time, there is more than one person who satisfies sub-paragraph
(1)(a) to (c) in respect of a machine, each of them is jointly and severally liable
for the duty.
      (3)
A person who is liable for machine games duty in accordance with this
paragraph is referred to as a “taxable person”.
5
Responsible for premises
12    (1)
This paragraph sets out who is “responsible” for premises for the purposes
of paragraph 11.
      (2)
If a person is registered in respect of premises, that person is responsible for
the premises.
10
      (3)
A person is “registered” at any time in respect of premises if at the time there
is an entry in force for that person in the MGD register in respect of those
premises.
      (4)
If no-one is registered in respect of premises, any person who is a registrable
person in respect of the premises or a representative of such a person is
15
responsible for the premises.
      (5)
Paragraphs 20 to 24 make further provision about registration and
registrable persons.
Excluded dual-use machines
13    (1)
A machine is an “excluded dual-use machine” if—
20
(a)
it is capable of being used both for playing machine games and for
some other purpose that is not related to playing machine games,
and
(b)
condition A or B is met.
      (2)
Condition A is that the machine is not designed, adapted or presented in
25
such a way as to—
(a)
facilitate its use for playing dutiable machine games, or
(b)
draw attention to the possibility of its use for playing such games.
      (3)
Condition B is that the machine is so designed, adapted or presented but the
person mentioned in paragraph 11(1) does not know, and could not
30
reasonably be expected to know, that it is.
      (4)
References to a machine being “adapted” include a machine to which
anything has been done, including the installation of computer software on
it.
      (5)
The Commissioners may by order specify criteria to be taken into account in
35
deciding whether a machine falls within the definition in sub-paragraph (1).
      (6)
The Treasury may by order amend this paragraph.
Accounting periods
14    (1)
An accounting period for machine games duty is a period of 3 consecutive
months.
40
      (2)
The first day of an accounting period is such day as HMRC may direct.

Finance (No. 4) Bill
Schedule 24 — Machine games duty
Part 1 — Imposition of duty
544

      (3)
A direction under sub-paragraph (2) may apply generally or only to a
particular case or class of case.
      (4)
HMRC may agree with a registered person to make either or both of the
following changes for the purposes of that person’s liability to machine
games duty—
5
(a)
to treat specified periods (whether longer or shorter than 3 months)
as accounting periods,
(b)
to begin accounting periods on days other than those applying by
virtue of sub-paragraph (2).
      (5)
HMRC may by direction make transitional arrangements for periods
10
(whether of 3 months or otherwise) to be treated as accounting periods
where—
(a)
a person becomes or ceases to be registered, or
(b)
an agreement under sub-paragraph (4) begins or ends.
      (6)
If there is reason to believe that a person who is liable for machine games
15
duty may not discharge that liability as it falls due from time to time—
(a)
HMRC may by direction specify shorter periods to be treated as
accounting periods for the purposes of that person’s liability to
machine games duty,
(b)
any such direction continues to have effect until it is withdrawn by
20
HMRC (unless otherwise specified in the direction), and
(c)
withdrawal of a direction does not prevent the giving of further
directions in respect of the same person.
Valuing prizes
15    (1)
This paragraph applies in valuing prizes for the purposes of this Schedule
25
(including in determining the maximum amount of cash that can be won
from playing a machine game).
      (2)
The value of a prize includes any portion that—
(a)
represents a refund of the charge payable for playing the game, or
(b)
is calculated by reference to the amount of any such charge.
30
      (3)
The value of a prize in the form of something that is reasonably considered
to equate to money is equal to the amount of money to which the thing is
reasonably considered to equate.
      (4)
For a prize in the form of a currency other than sterling or in the form of
something that is reasonably considered to equate to such a currency—
35
(a)
the value of the prize is, in relation to any day, the sterling equivalent
of that currency determined by reference to the London closing rate
for that currency for the previous day, and
(b)
for the purposes of paragraph 7(3), the day in relation to which the
value is assessed is the last day of the relevant accounting period.
40
      (5)
The value of a prize other than cash depends on the person (“A”) from whom
the person paying out the prize (“B”) obtained it—
(a)
if A was not connected with B when B obtained the prize from A, the
value is the cost to B of obtaining the prize from A,
(b)
if A was connected with B when B obtained the prize from A, the
45
value is the smaller of—

Finance (No. 4) Bill
Schedule 24 — Machine games duty
Part 1 — Imposition of duty
545

(i)
the cost to B of obtaining the prize from A, and
(ii)
the amount that it would have cost B, at the time B obtained
the prize, to obtain it from a person not connected with B.
      (6)
Whether A is connected with B is to be determined in accordance with
section 1122 of CTA 2010.
5
      (7)
If the value of a prize other than cash cannot reasonably be determined in
accordance with sub-paragraph (5), the value of the prize is such amount as
is just and reasonable.
      (8)
For the purposes of sub-paragraph (5), an amount paid by way of value
added tax on the acquisition of a thing is to be treated as part of its cost
10
(whether or not the amount is taken into account for the purpose of a credit
or refund).
      (9)
The Commissioners may by regulations make further provision about the
way in which prizes are to be valued for the purposes of this Schedule.
     (10)
This paragraph applies to a part of a prize as it applies to a whole prize, and
15
references to a prize are to be read accordingly.
Valuing charges
16    (1)
This paragraph applies in determining for the purposes of this Schedule the
amount of a charge (or the highest or lowest charge) payable or due for
playing a machine game.
20
      (2)
If the amount of a charge in money’s worth cannot be determined, it is
assumed to be such amount as is just and reasonable.
      (3)
If a composite charge is payable or due for the opportunity to play a machine
game more than once, the amount of the charge payable or due for each
individual go is to be determined on a just and reasonable basis.
25
      (4)
If a composite charge is payable or due for the opportunity to play a machine
game and for something else, the amount of the charge payable or due for
playing the game is to be determined on a just and reasonable basis.
      (5)
The Commissioners may by regulations make further provision about the
way in which the amount of charges is to be determined for the purposes of
30
this Schedule.
      (6)
Sub-paragraph (7) applies if—
(a)
a dutiable machine game is played in pursuance of an offer that
permits the player to pay nothing or less than the charge that the
player would have been required to pay without the offer,
35
(b)
the offer was made available to the player by way of winnings from
an activity in respect of which another duty of excise or value added
tax is charged, and
(c)
the value of the offer is deductible in calculating the amount of that
other duty or value added tax payable in respect of that activity.
40
      (7)
The amount of the charge due from the player for playing the dutiable
machine game is taken for the purposes of paragraph 7 to be the amount that
the player would have been required to pay without the offer.

Finance (No. 4) Bill
Schedule 24 — Machine games duty
Part 1 — Imposition of duty
546

      (8)
Regulations under sub-paragraph (5) may include provision extending or
modifying the circumstances in which sub-paragraph (7) applies.
Collection and management
17
The Commissioners are responsible for the collection and management of
machine games duty.
5
Returns
18    (1)
The Commissioners may make regulations requiring registrable persons to
make returns to HMRC in respect of relevant machines.
      (2)
Regulations under this paragraph may in particular make provision about—
(a)
liability to make a return,
10
(b)
timing,
(c)
form,
(d)
content,
(e)
method of making (including provision requiring returns to be made
electronically),
15
(f)
declarations,
(g)
authentication, and
(h)
when a return is to be treated as made.
Assessment and payment
19    (1)
The Commissioners may make regulations about payment of machine
20
games duty.
      (2)
The regulations may in particular make provision about—
(a)
timing,
(b)
instalments,
(c)
methods of payment (including provision requiring payments to be
25
made electronically),
(d)
when payment is to be treated as made, and
(e)
the process and effect of assessments by HMRC of amounts due.
      (3)
Subject to regulations under this paragraph, section 12 of FA 1994
(assessment) applies in relation to liability to pay machine games duty.
30
Registration
20    (1)
The Commissioners must maintain a register of those responsible for
premises where relevant machines are located.
      (2)
The register is to be known as the MGD register.
      (3)
A person must not make a relevant machine available for use by others for
35
playing dutiable machine games on it unless a registrable person (whether
that person or someone else) is registered in respect of the premises where
the machine is located.
      (4)
Paragraph 21 identifies who is a registrable person in respect of premises.

Finance (No. 4) Bill
Schedule 24 — Machine games duty
Part 1 — Imposition of duty
547

      (5)
This paragraph does not apply in relation to a relevant machine if it is
reasonable to expect that the only takings and the only payouts in respect of
the machine would be amounts that would be left out of account by virtue
of paragraph 8.
Registrable persons
5
21    (1)
If a person holds a relevant licence or permit in respect of premises, that
person is a registrable person in respect of those premises.
      (2)
But if the premises are leased to a person (“T”) for the purposes of an activity
for which an alcohol licence is required and the alcohol licence in respect of
the premises is held by someone else, T (and not the licence-holder) is a
10
registrable person in respect of those premises.
      (3)
If the premises are a stall at a travelling fair, each of the following is a
registrable person in respect of the premises—
(a)
the holder of the stall, and
(b)
the person in charge of the fair.
15
      (4)
For premises not falling within any of the preceding sub-paragraphs, each
person listed in sub-paragraph (5) is a registrable person in respect of the
premises.
      (5)
The persons are—
(a)
a person required to hold a relevant licence or permit in respect of the
20
premises,
(b)
an owner, lessee or occupier of the premises,
(c)
a person who is responsible to the owner, lessee or occupier for the
management of the premises,
(d)
a person who is responsible for controlling the use of machines that
25
are made available on the premises for use by others for playing
dutiable machine games on them, and
(e)
a person who is responsible for controlling the admission of persons
to the premises or for providing persons resorting to the premises
with goods or services.
30
      (6)
“Relevant licence or permit” is defined in paragraph 22.
      (7)
“Alcohol licence” means—
(a)
a premises licence issued under Part 3 of the Licensing Act 2003 that
authorises the supply of alcohol for consumption on the licensed
premises,
35
(b)
a premises licence issued under Part 3 of the Licensing (Scotland) Act
2005, except where such a licence only applies to the sale of alcohol
for consumption off the premises, and
(c)
a licence issued under the Licensing (Northern Ireland) Order 1996
(S.I. 1996/3158 (N.I. 22)), except where such a licence only applies to
40
the sale of intoxicating liquor by retail for consumption off the
premises.
      (8)
“Travelling fair” means a fair—
(a)
consisting wholly or principally of the provision of amusements,
(b)
provided wholly or principally by persons who travel from place to
45
place for the purpose of providing such fairs, and