William Hill set for £150 million refund after HMRC backs down in FOBT tax row

William Hill could be set for a tax windfall of up to £150 million after the UK tax authorities conceded defeat in a dispute over the amount of VAT high street bookmakers paid on fixed odds betting terminals (FOBTs).

The bookmaker announced on Wednesday morning that HM Revenue & Customs (HMRC) would not be appealing against a ruling by the Upper Tier Tribunal that VAT was incorrectly applied to the revenues from the machines before 2013.

The decision could lead to hundreds of millions of pounds being returned to the industry.

Betfred and Rank brought the case, saying they had been incorrectly paying VAT on their winnings on FOBTs between 2005 and 2013 as the same games, or similar games available on the machines, were exempt from the tax when played in casinos or online.

William Hill's statement said the firm had submitted claims "which are substantially similar to those provided in the VAT challenge".  

The bookmaker added: "While William Hill currently expects the net cash recovery to be material, its precise quantum remains uncertain. Nevertheless, the board has considered a number of scenarios which suggest a potential net cash recovery of between £125m and £150m.

"As a result of this announcement, we will now engage with HMRC to agree the support for, quantum and timing of the refund."

'HMRC accepts the Upper Tribunal's decision'

Confirming that HMRC did not plan to take the appeal process further, a spokesperson said: "Following extensive litigation, during which the parties exhausted every legal avenue available, HMRC accepts the Upper Tribunal's decision.

"We are unable to provide a figure as HMRC will now need to verify each claim made by other operators is legitimate. Offset action will be taken to clear any outstanding HMRC debts before any refunds are made."

Analysts at Goodbody said William Hill's announcement was "a clear positive for the group's liquidity position", adding it "further reduces any lingering risk of the group having to raise equity".

William Hill shares ended Wednesday up 4p at 126p.

A Betfred spokesperson said of the news: "HMRC have now indicated that they do not intend to appeal any further, which means that this case, in so far as it affects Betfred, is now at an end."

Ladbrokes and Coral's parent company GVC Holdings did not comment on the latest news but had said in its annual report that the group could expect to receive a refund of approximately £200m.