Bacta and HMRC highlight high-rate MGD overpayment

Check your MGD returns, you may be overpaying. That’s the message from Bacta and HMRC this week as figures indicate larger than forecast high rate band returns.


Bacta has urged members to be aware of potential Machine Games Duty overpayment, after HMRC reported that a “significant number” of MGD operators could be paying too much.

Following the April FOBT stake cap, the tax office had expected to see the higher rate band payments drop, however head of gambling duties policy at HMRC John Waller has stated that “customer error” may be at fault for its continuation.

“There are quite a significant number of MGD operators still paying MGD at 25 percent,” said Waller. “The 25 percent rate is the higher rate of MGD and is payable on machines with a cost of more than £5 to play (Type Three machines.)”

“Since the FOBT stake reduction, we wouldn’t expect to see any operators paying duty at the higher rate. Initial inquiries have found that these are mainly due to customer error.”

The 25 percent duty band was introduced in 2015, two years after MGD first replaced VAT across the country, and two years prior to the first proposal of an FOBT stake cap, with MGD receipts for 2017/18 hitting £720m.

The potential loss of £287m in annual MGD was instrumental in the government’s delay in enacting FOBT regulation. Only the Bacta-commissioned Cebr research, which predicted £419m of alternative annual benefit, turned the tide of the chancellor’s financial indecision.

Though the majority of Bacta’s members currently pay either Type One duty, the ‘lower rate’ return set at five percent for games costing less than 20p, or ‘standard rate’ Type Two duty, requiring 20 percent on gameplay between 21p and £5, members are still encouraged to remain cognisant of the differentials.

However, Bacta CEO John White noted that despite the report, it is unlikely that amusement industry operators themselves were responsible for the inaccurate returns.

“I doubt operators in our industry would be making any errors,” said White, noting “there would have been no change in process” when the higher B2 rate was announced.

Following the discovery of overpayment in several instances, Waller added that “compliance colleagues are looking into these cases to identify the reasons,” with all MGD operators also urged to check their current rates of return.


This article was originally published on

Related Posts