Simon Hackett & Anor v The Commissioners for HMRC
[2024] UKFTT 749 (TC)
L & L Europe Limited v The Commissioners for HMRC
13 February 2024
[2024] UKFTT 144 (TC)
First-tier Tribunal
An online casino gave players money back (cashback) if they lost all their bets. The tax man (HMRC) said this wasn't a prize and shouldn't be deducted from taxes. The court said it *was* a prize because it's part of the game, so the casino can deduct it from their taxes.
Key Facts
- •L&L Europe Limited (Appellant) operates online casinos and offers cashback payments to customers who lose all their deposits in a session.
- •Cashback is calculated as 10% of lost deposits and can be withdrawn like winnings.
- •HMRC argued cashback payments weren't deductible as 'prizes' under section 157 Finance Act 2014 because they weren't 'won' in the traditional sense.
- •The Appellant argued cashback was either a prize or a return of part of the gaming payment, both deductible under section 157 and 160.
Legal Principles
Interpretation of 'prize' and 'won' in the context of the Remote Gaming Duty (RGD) legislation.
Finance Act 2014 (FA14), sections 157, 160, and Gambling Act 2005, section 6.
Statutory construction, focusing on the purpose and context of the legislation.
Various case laws cited including Aspinalls Club Ltd v HMRC [2013] EWCA Civ 1464, Fowler v HMRC [2020] UKSC 22, R (oao Shropshire and Wrekin Fire Authority and others) v Secretary of State for the Home department and the Police and Crime Commissioners for Cambridgeshire and West Mercia [2019] EWHC 1967 (Admin), Pinner v Everett [1969] 1 WLR 1266, Lachaux v Independent Print Ltd [2019] UKSC 27, Barras v Aberdeen Steam Trawling & Fishing Co Ltd [1933] AC 402, Kellogg Brown and Root Holdings (UK) Ltd v HMRC [2010] EWCA Civ 118.
The deeming provision in section 160(3) FA14 and its application to cashback payments.
Finance Act 2014, section 160(3).
Outcomes
Appeal allowed.
The Tribunal found that cashback payments are 'prizes won' under section 157 FA14, either directly or through the deeming provision in section 160(3). Cashback is an inherent feature of the game, a potential outcome known to the player from the outset. The cashback, as a real cost to the Appellant, is a payment directly related to the gaming, fulfilling the conditions of the RGD Profits Calculation.