There will be big changes to the taxation of gaming and quiz machines and other “machine games” in pubs when Machine Games Duty (MGD) is introduced in the New Year. HMRC would stress that publicans need to act now to find out how the changes will affect them. Many publicans will need to apply to HMRC for MGD registration by 11 January 2013 or risk a penalty.
What is Machine Games Duty?
Machine Games Duty is a new tax being introduced on 1 February 2013. It will replace VAT and Amusement Machine Licence Duty (AMLD) currently charged on machines.
The duty will need to be paid on the profits from games played on machines for a cash prize greater than the cost to play. These are known as “machine games”. All gaming machines offering cash prizes will come under MGD. Quiz machines and other skill machines will come under MGD if they offer a cash prize greater than the cost to play.
At what rates will MGD be charged?
There will be two rates of duty for MGD:
a) lower rate at 5% - the lower rate is for machines where the maximum cost to play any game on that machine (the 'maximum stake') is 10 pence, and the cash prize is £8.00 or less
b) standard rate at 20% - the standard rate applies to any machine games subject to MGD, that aren't covered by the lower rate
If a machine offers several dutiable machine games, and one or more is subject to the standard rate, then all the dutiable machine games on that machine are subject to the standard rate.
Who needs to register for MGD?
All pubs with gaming machines and other machine games need to be covered by an MGD registration.
In the case of pubs that are not tenanted pubs, the holder of the alcohol licence needs to register for MGD. For tenanted pubs, the person who needs to register is the tenant.
How do I register?
You can use HMRC’s MGD online registration service, which launched on 1 November 2012.
The online system is fast, secure and there is also an on-screen help that guides you through the process. Once you have applied you will get an immediate on-screen acknowledgement that HMRC has received your application.
Alternatively, you can apply for MGD registration using a paper form.
When do I need to register by and what will happen if I don’t register?
You need to register by 11 January. You may be liable for penalties if you apply for MGD registration after this date and you are not on the register by 1 February.
Penalties may not be appropriate in all cases, and each will be dealt with on its own merits. However, this does not mean that HMRC will be sympathetic to people who register late for no good reason.
Who is responsible for making MGD returns and payments?
If you are the person registered for MGD you will need to make regular returns to HMRC giving details of machine game profits and pay MGD due. You can appoint someone to do this for you (“an agent”) if you wish but you will still be responsible for ensuring that both the returns and payments are made.
For some publicans this may mean a different relationship with machine suppliers in future. Suppliers may in the past have take the responsibility for paying tax on machines – they will no longer do this. HMRC advises that publicans discuss MGD and the impact with their machine supplier.
Visit the HMRC webpage on Machine Games Duty
Excise and Customs Helpline: 0845 010 9000 (press ‘3’ on the main menu for MGD enquiries).
You can also email HMRC