Machine Games Duty – don’t get caught out!
17 January 2014
Last February, HMRC replaced Amusement Machine Licence Duty (AMLD) with Machine Games Duty (MGD).
MGD is charged on the playing of dutiable machine games where customers pay to play games in the hope of winning a cash prize worth more than the cost to play. MGD is not payable on machine games that only offer non-cash prizes or cash prizes that are less than the cost to play.
Importantly, MGD does not apply to Category B3A machines nor to Pull Tab Lottery machines which dispense lottery tickets – these are exempt from the duty.
If you have dutiable machines on your premises, you must be registered with HMRC (this can be done online) before the machines can be played. After that, you’ll need to pay the duty that you owe, quarterly.
Most of our customers are telling us that they are now fully familiar with the new MGD regime and are submitting their MGD returns to HMRC as required.
However, we know there are a number of customers who registered for MGD but have not actually made any machines available for play. This is possibly because the only machine that they have is a Category B3A, which is exempt from the duty. This is fine, but these customers will still need to submit a ‘nil return’, showing that there is no duty to pay. If they don’t, HMRC will issue an assessment for the amount of tax they estimate may be due (not knowing that the real figure is zero). HMRC may also issue £100 penalty notices (rising to £400) for non-submission of returns – we know that some of these have already been sent out.
If your venue won’t have any dutiable machines available to play, but is registered for MGD, then you can always de-register, to avoid this scenario. Doing this will mean that you will no longer be required to submit a nil return, and will avoid the chance of an unwelcome (and unnecessary) penalty notice arriving.
De-registration is a simple process – this can be done online, or you can write to HMRC requesting removal from the register. You’ll need to remember to make a nil return for the final period during which you were registered, however. Otherwise, the dreaded penalty notice may yet arrive.
If you’re unsure about your responsibilities towards MGD, don’t worry – there’s plenty of help at hand. For starters, the HMRC website is a great resource (see: http://www.hmrc.gov.uk/machinegamesduty/machine-games-duty.htm#5). And of course, your Dransfields contact will be more than happy to talk to you about what your venue needs to do. That’s what we’re here for. Either way, it’s more straight forward than you think – just be sure you don’t get caught out!