British firm is set to spend ¬£4.5 million to cap some of its tax liabilities as VAT issue thought settled in 2008 continues to drag on.
Wednesday 29th September 2010
British gambling giant Rank Group is set to pay a third party £4.5 million in cash as insurance against some of its ‚Äėcontingent tax liabilities‚Äô in the event that the European Court Of Justice upholds an appeal by Her Majesty's Revenue And Customs (HMRC).
The appeal by HMRC goes back to 2008 when Rank received a refund of £59.1 million in overpaid value-added tax (VAT) after it successfully argued that the UK government‚Äôs inconsistent application of tax to games of interval bingo contravened the European Union‚Äôs principles of fiscal neutrality.
Although this decision was subsequently upheld by the VAT And Duties Tribunal and the UK High Court, HMRC appealed to the European Court Of Justice with a final decision expected by the close of 2012.
‚ÄúRank will make a cash payment of £4.5 million in 2010 in order to fund the agreement, which will be recorded as an exceptional item,‚ÄĚ read a statement from Maidenhead-based Rank.
‚ÄúIn the event that the European Court Of Justice finds in favour of HMRC, Rank‚Äôs net liabilities would total £25.6 million plus interest as a result of the cap agreement rather than £66.1 million plus interest if the agreement was not in place.
‚ÄúThe agreement does not cover a further £42.5 million plus interest of VAT refunds relating to overpaid VAT on games of main stage bingo and amusement machines nor does it cover a contingent tax asset of up to £35 million related to a claim made under the Conde Nast/Fleming ruling.‚ÄĚ