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United Kingdom VAT & Duties Tribunals (Excise) Decisions
You are here: BAILII >> Databases >> United Kingdom VAT & Duties Tribunals Decisions >> United Kingdom VAT & Duties Tribunals (Excise) Decisions >> Gorgie Mills Bowling Club v Customs and Excise [2004] UKVAT(Excise) E00764 (14 July 2004)
URL: http://www.bailii.org/uk/cases/UKVAT/Excise/2004/E00764.html
Cite as: [2004] UKVAT(Excise) E00764, [2004] UKVAT(Excise) E764
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E00764
Betting and Gaming Duties – gaming machines held by social club – mistaken application for additional licence duplicating existing licence – whether duty recoverable after expiry of licence – Schedule 4, paragraph 11 of Betting and Gaming Duties Act 1981 (as amended).
EDINBURGH TRIBUNAL CENTRE
GORGIE MILLS BOWLING CLUB Appellant
- and -
Tribunal: (Chairman): Mr Kenneth Mure, QC
for the Appellant Mr Kevin Jamieson
for the Respondents Mr Andrew Scott, Shepherd & Wedderburn, WS
© CROWN COPYRIGHT 2004.
Introduction
In this appeal the Appellant was represented by its Treasurer, Mr Kevin Jamieson. The Respondents were represented by Mr Andrew Scott, Solicitor, of Messrs Shepherd & Wedderburn, WS. I heard evidence from Mr Jamieson on behalf of the Appellant. The Respondents called two witnesses, John Aitken and Mairi Russell, both officers of HM Customs & Excise.
The Appellant is a Bowling Club providing additionally social facilities. It leases two gaming machines (or "fruit machines") on its premises. The issue for determination is whether duty paid for a gaming licence no 1170762 in respect of two fruit machines for the period from 31 May 2002 – 30 May 2003, which the Appellant did not require as it held in fact another current licence for the fruit machines, is re-payable. The appeal is in terms of Sections 14-16 of the Finance Act 1994, which provide that an Appeal to this Tribunal is available against inter alia a decision to refuse re-payment of customs duties. The refusal complained of is set out in terms of the Respondents' letter from Mrs Russell dated 15 December 2003 (tab 12).
The Legislation
In terms of Sections 21-26A of the Betting and Gaming Duties Act 1981 (as amended) there is a liability to Excise Duty on Gaming Machine licences. Further relative provisions are contained in Schedule 4 and in particular in respect of the surrender of a licence and re-payment of duty Paragraph 11 (as now amended) provides:-
11 (1) The holder of an amusement machine licence may surrender it to the proper officer at any time.
(1A) On the surrender of the licence the holder shall be entitled to repayment of duty of the following amount.
(1B) That amount is the difference between -
(a) the amount of duty actually paid on the licence, and
(b) the amount (if less) that would have been paid if the period for which the licence was granted had been reduced by the number of complete months in that period which have not expired,
and for the purposes of this paragraph a seasonal licence is to be treated as granted for the period of eight months beginning with 1st March.
(1C) Where, in a case where duty is being paid in accordance with arrangements made under paragraph 7A above, the amount of duty actually paid on a licence that is surrendered is less than the amount which would have been paid on that licence if the period for which it was granted had been reduced by the number of complete months in that period which have not expired when the licence is surrendered, the difference between those amounts shall be treated as unpaid duty.
The Facts
Much of the evidence was not controversial. Accordingly I find the following facts admitted or agreed, viz:-
(i) Mr Jamieson has been Treasurer of the Appellant Club since 1999 and is responsible for its financial affairs. He was responsible for inter alia the Club's complying with licensing regulations and payment of duty in respect of the gaming machines on its premises.
(ii) At all material times the Club had (only) two such machines, one in its lounge and another in its function hall. These were leased originally from Woolfson Leisure, a Lanarkshire-based concern. Because of servicing delays the Club decided to terminate this contract and replacement machines were then provided by a local concern.
(iii) On behalf of the Club Mr Jamieson applied for and obtained the following licences for the gaming machines, viz:-
(a) no. 1021668 – from 1 June 2001 - 7 September 2001, when surrendered.
(b) no. 1069372 – from 1 October 2001 - 30 September 2002.
(c) no. 1170762 – from 31 May 2002 - 30 May 2003.
(d) no. 1211468 – from 1 October 2002 - 30 September 2003.
(e) no. 1297209 – from 31 May 2003 – surrendered in October 2003 and backdated to commencement.
(f) Current licence – from 1 October 2003 – 30 September 2004.
(Reference is made to the Schedule of Applications for 5 of these licences which is produced. It may be noted that licences "c" and "e" duplicate periods covered by other licences. No repayment, of course, was made in respect of "c". It may be noted that application "b" is signed by "Stephen Gordon", an officer of Customs & Excise, on behalf of the Club. It was explained in evidence by Mr Aitken that this was done for purposes of internal administration to speed up its processing. This evidence I accepted).
(iv) The Application for Licence no 1297209 on which details in Section 1 are typed, was prepared by the Respondents and sent to the Appellant Club about 4-6 weeks prior to the due date for renewal.
(v) The Application for Licence no 1170762 on which all details are handwritten was prepared by the Appellant Club together with the Supplier of the gaming machines on its behalf. This Application was made by Mr Jamieson in error and under the mistaken belief that there was no other licence currently in force for the machines.
(vi) Payment for all licence duties was made by monthly direct debit from the Club's bank account. Account statements were sent weekly to the Club for Mr Jamieson's reference.
(vii) On about 1 October 2003 Mr Jamieson on behalf of the Club, having realised that licences nos. 1170762 and 1297209 were superfluous to requirements, sought re-payment of duty paid.
(viii) The Respondents allowed re-payment of duty in respect of licence no 1297209 which had not expired when re-payment was requested. Re-payment and deemed surrender were back-dated to its commencement i.e., 31 May 2003. The Respondents have refused any repayment of duty in respect of licence no 1170762 which had expired as at 1 October 2003 (see Tab 6).
(ix) Mr Jamieson complained on behalf of the Club to the Respondents without success (tabs 8 & 9) and thereafter to the Adjudicator's Office (tabs 10 & 11). Then Mrs Russell on behalf of the Respondents wrote to him, explaining their decision to refuse the refund of duty on licence no. 1170762 and suggesting possible recourse to this Tribunal.
It is, I think, appropriate for me to comment further on the evidence insofar as explaining the circumstances in which the "duplicate" applications were made, even although it may not be relevant ultimately to the determination of the Appeal. Mr Jamieson explained that the "jackpot" payable by the machines had been changed which required a re-classification of them for taxing purposes. While the term of the Club's licence had been from "October-September", he had understood that it had been changed to "May-May". He felt aggrieved that Customs & Excise in processing the application ("c" supra) in May 2002 for licence no. 1170762 which bore to be in Section 2 in respect of a "renewal", had not discovered from their records that another (sufficient) licence was in fact current until September 2002. However, he conceded in cross-examination that from the bank statements he should have noticed subsequently the extra deductions in payment of duty.
Mr Aitken for the Respondents explained that no such check would have been made given the very many forms of this nature received. The responsibility for making such an application, in Mr Aitken's view, rested on the applicant. For instance, the applicant might have acquired additional machines. He explained further that the particular application form had not originated from HM Customs & Excise as the details in Section 1 were in manuscript, suggesting that the applicant or his supplier had completed these. By contrast in the Application in May 2003 for licence no. 1297209 Section 1 had been typewritten, indicating that probably it had been issued by the Respondents.
In these circumstances I was not satisfied that the Club could reasonably complain that the management of HM Customs & Excise had contributed to its error arising out of its processing the Application in May 2002 at "face" value and without further enquiry.
So far as the refund on licence no. 1297209 was concerned Mr Aitken explained that since it was current as at its surrender in October 2003, the Respondents' policy was to apply a discretion in respect of re-payment, and this had been exercised in favour of the Appellant to the extent of a full backdated refund.
Submissions for Respondents
Mr Scott invited me to refuse the appeal. He referred me to particularly the terms of Paragraph 11 of the 1981 Act (as amended). Essentially he submitted that on a correct interpretation of its terms no refund of duty should be made if, as at the date of surrender, there was no unexpired period of the licence remaining. He referred me to the Respondents' Notice 454 (tab 14) as being a sound interpretation of this provision.
Mr Scott argued further that there was no duty on the Respondents to query or investigate each and every licence application against their internal records. The responsibility for making such an application rested with the applicant. It had, after all, obtained the licences, which could have been used for extra machines, and thus duty was payable. While he accepted that the error by the Appellant was genuine, this was not a relevant consideration given the terms of the statutory provisions. Also, the fact that the Respondents might have been enriched by payment of monies not strictly due, was not a factor which should be taken into account given the terms of the legislation. He referred me to the decision in Margrette Cooke t/a Sandown Snooker Club (Tribunal Decision No – E00160) in which an applicant because of a genuine error applied for extra superfluous licences. There a refund was refused because no application had been made prior to the expiry of the licences. While a degree of sympathy for an Appellant in such circumstances might be appropriate, there was no discretion to enable a repayment to be made in circumstances in which the licence had fully expired.
Submissions for Appellant
Mr Jamieson urged me to allow the Appeal and submitted that a full refund of duty should be made in respect of licence no. 1170762.
He submitted that the problem arose because of failures in the systems of HM Customs & Excise. He argued that they should have discovered the error in May 2002 when the application for licence no. 1170762 was made. However many such applications they received, Mr Jamieson argued that there were records available and each application should be checked against such records. Such an investigation would have avoided the present difficulty.
Further, Mr Jamieson argued, there were Local Authority Regulations affecting the number of gaming machines which a licensee could hold at any one time. The Respondents, he argued, should have been alert to these and checked any application for (apparently) extra machines against such regulations.
A further fault in the Respondents' systems was that one of their officials, Stephen Gordon, had signed application "b" (for licence no. 1069372). He argued that only an applicant should sign such a form notwithstanding considerations of administrative efficiency.
The Respondents in the exercise of their discretion had allowed a full refund in respect of the (unexpired) licence no. 1297209. That discretion, Mr Jamieson argued, should be extended to licence no. 1170762 even although it had expired when the application for re-payment was made. He suggested that the circumstances in Cooke should not be viewed as similar to the circumstances of his Club.
Finally, Mr Jamieson noted, the amount involved was considerable in relation to the financial circumstances of his Club. It had to generate an income sufficient to meet its expenditure which amounted annually to about £50,000.
Decision
The issue for determination is whether duty paid in respect of the licence no. 1170762 granted for the period from 31 May 2002 – 30 May 2003 should be re-paid to the Appellant. I consider that this is a matter of law and particularly construction of Paragraph 11 of Schedule 4 of the 1981 Act (as amended). It is not in dispute that the licence had expired when re-payment was requested. The terms of Paragraph 11 contemplate in my view an un-expired portion of the term of the licence when re-payment is sought. The calculation of any re-payment is made by reference to the length of such an un-expired period remaining. All this in my view confirms the interpretation argued on behalf of the Respondents that no re-payment should be made, if this is requested after the licence has expired.
While full re-payment of all duty paid on licence no. 1297209 for the succeeding year was made – thus including that part of its currency which had expired – this, according to the Respondents' witnesses was by concession and because the licence had not expired. I do not consider that that decision in any way obliges the Respondents to extend such a concessionary approach in relation to re-payment of duty on the earlier licence which had, of course, completely expired.
A degree of sympathy is appropriate and has been shown to the Appellant given that the sums involved are substantial in relation to its finances. However, the legislation does not on my reading permit such a consideration to be taken into account. While Sub-paragraph (1) permits a licence to be surrendered "… at any time", Sub-paragraphs (1A, 1B and 1C) restrict any re-payment of duty to an amount related to the un-expired period of the licence.
For these reasons, therefore, this Appeal is refused.
Expenses
Neither Party sought expenses and accordingly no award is made.
Finally, I would thank both Mr Jamieson and Mr Scott for their lucid and thorough presentation of their arguments.
EDN/04/8001