HMRC U Turn On Machine Games Duty

On the 28th of November I wrote about HMRC's Machine Games Duty:

"Registrations in respect of existing operations must be made before 1 January 2013 to allow HMRC to process applications in plenty of time before 1 February 2013."

Today HMRC have announced a U Turn, and have extended the deadline to 11 January 2013 (although seeming to leave the window open for late registrations even after the extended deadline):

"Online registration for the new Machine Games Duty (MGD) regime has been extended until 11 January 2013, after representation from the industry. 

MGD comes into force on 1 February 2013. Anyone responsible for premises from which gaming machines and other machine games are provided for play must be registered with HM Revenue & Customs (HMRC) before that date. HMRC cannot guarantee that registration applications received after 11 January will be processed in time.

Failure to register could lead to a penalty of up to 100 per cent of the tax due."

Methinks they are not expecting this to work very smoothly!

Tax does have to be taxing.

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Click the link to read about: Tax Investigation for Dummies

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Jackpot! - Machine Games Duty

HMRC has provided the ICAEW Tax Faculty with a wee note about Machine Games Duty (MGD),  which replaces VAT from 1 February 2013.

Here is the article in full:

"Machine Games Duty (MGD) is a new tax which is being introduced on 1 February 2013. It will replace VAT currently charged on the income from gaming machines and Amusement Machine Licence Duty (AMLD).

MGD will need to be paid on the profits from most machine games. A machine game is a game played on a machine for a maximum cash prize greater than the cost to play. This means that a gaming machine or a skills with prizes machine (SWP) may be a machine subject to MGD.

Someone responsible for premises where machine games are played on which MGD will be due must register for the duty with HMRC. In many cases the person responsible for premises will be the person who holds the licence or permit which allows machines to be provided for play on the premises. In certain circumstances more than one person may be responsible for particular premises - in these circumstances only one person needs to register.

What is happening and when?

The MGD online registration service was launched on 1 November 2012. If machine games will be available for play on 1 February 2013, those responsible for premises must apply for registration before 1 January 2013 to avoid a penalty.

The MGD online registration service will enable applicants or their agents to register for MGD online and make changes to their registered business details online.

Over the coming months, the service will also let registered people and agents submit and view returns online.

Machine Games Duty for agents

HMRC's Machine Games Duty for Agents service allows agents to carry out a number of tasks online on behalf of their clients.

Key features of the service include:

• setting up online authorisation to act on behalf of clients
• changing client's registration details

In time, the service will also allow agents to:

• submit client's MGD Returns online
• view client's MGD Returns that have been submitted online

Points of interest

Those responsible for premises on which dutiable machines will be available for play at 1 February 2013 will be able to register for MGD from 1 November 2012.

Registrations in respect of existing operations must be made before 1 January 2013 to allow HMRC to process applications in plenty of time before 1 February 2013.

Businesses which have registered online for MGD will be automatically enrolled for the MGD online service. An ‘activation’ code (sometimes referred to as a PIN) will be sent in the post to the business address. This is required to activate the MGD online service.

Find out more about Machine Games Duty Online
Find out more about How to sign up for Machine Games Duty for agents"

Fair enough.

Now here's what they haven't told anyone about the resources allocated for this, but loyal readers with long memories may recall I wrote about this in March of this year.

The resources for the implementation of the tax (ie staff and computer systems) is, so I am advised,  woefully inadequate. Currently the UK has approximately 1000 Bookmakers, 300 Bingo companies, 4 or 5 Pool Betting operators and about the same number of casino operators - plus the national lottery. AMLD licenses, whilst large in number, are usually issued to traders on an annual basis as there is an advantage built in to getting 12 month licenses, and it is fairly cut and dried if the tax is being paid.

Under the new system there will be another 42,000 quarterly returns, thus massively increasing the workload of HMRC's accounting centre.

How many extra staff will HMRC allocate for this increased workload?

Approximately 12-15 extra staff (about double the current number), they will help to input the forms. Unfortunately, despite Phil Pavitt's alleged superhuman abilities, the new computer system was not yet available for them to train on. I am also advised that the budget for development of the computer system was already "more than spent", with nothing to show for it.

Now I can hear some wise heads tutting, and asking why input is not done online (as HMRC prefers for so many other taxes etc). Well it seems that the Treasury insisted that traders be allowed to put in paper returns, and as you can see from the HMRC statement online submission of tax returns is not yet possible.

The origins of MGD can be found in the systems from Australia and New Zealand tax authorities, except that in Australia and New Zealand there are enforced computer audit functions and bank accounts from which the tax authority can take the appropriate tax amount.

Additionally, the UK legislation does not force traders to keep individual machine records. This means that the tax is almost impossible to audit, and it will make it difficult to work out what the traders' normal tax liabilities are from the start.

Problem?

Yes, the tax covers two categories of machines which therefore need to be known and identified.

Did HMRC warn HMT that this new tax won't work?

I am advised that they did, bit that the warnings have been ignored!

Sadly another accident waiting to happen, which will be blamed on HMRC (even though in this instance it appears not to be HMRC's fault).

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

Insurance to protect you against the cost of enquiry or dispute with HMRC is available from several sources including Solar Tax Investigation Insurance.

Ken Frost has negotiated a 10% discount on any polices that may suit your needs.

However, neither Ken Frost nor HMRCISSHITE either endorses or recommends their services.

What is Solar Tax Investigation Insurance?

Solar Tax Investigation Insurance is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Solar Tax Investigation Insurance




Tax Investigation for Dummies, by Nick Morgan, provides a good and easy to read guide for anyone caught up in an HMRC tax investigation. A must read for any Self Assessment taxpayer.

Click the link to read about: Tax Investigation for Dummies

HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

Jackpot!

My thanks to a loyal reader who penned me an email the other day, advising me of a wee problem on the horizon for HMRC partly caused by the Treasury.

The Treasury has come up with a "terrific new wheeze" (well "new" is an exaggeration, this was actually formulated in the tailend of 2010 and is set to be implemented 1st Feb 2013) relating to the taxation of fruit machines etc, known as Machine Games Duty (MGD).

MGD replaced Amusement Machine Licence Duty (AMLD) in order that HMRC avoids a conflict with the EU 6th directive about not taxing gambling. AMLD taxed the machine, profits from the machine were subject to VAT (the VAT could then be recovered from the purchase and operations of the machines).

However, MGD stops the trader from recovering the VAT paid.

So far so good!.

However, as with all the best laid plans of mice, men and Treasury officials there hides a fly in the oinkment.

The problem lies in the implementation of this new tax.

The resources for the implementation of the tax (ie staff and computer systems) is, so I am advised,  woefully inadequate. Currently the UK has approximately 1000 Bookmakers, 300 Bingo companies, 4 or 5 Pool Betting operators and about the same number of casino operators - plus the national lottery. AMLD licenses, whilst large in number, are usually issued to traders on an annual basis as there is an advantage built in to getting 12 month licenses, and it is fairly cut and dried if the tax is being paid.

Under the new system there will be another 42,000 quarterly returns, thus massively increasing the workload of HMRC's accounting centre.

How many extra staff will HMRC allocate for this increased workload?

Approximately 12-15 extra staff (about double the current number), they will help to input the forms. Unfortunately, despite Phil Pavitt's alleged superhuman abilities, the new computer system is not yet available for them to train on. I am also advised that the budget for development of the computer system is already "more than spent", with nothing to show for it.

Now I can hear some wise heads tutting, and asking why input is not done online (as HMRC prefers for so many other taxes etc). Well it seems that the Treasury insisted that traders be allowed to put in paper returns.

The origins of MGD can be found in the systems from Australia and New Zealand tax authorities, except that in Australia and New Zealand there are enforced computer audit functions and bank accounts from which the tax authority can take the appropriate tax amount.

Additionally, the UK legislation does not force traders to keep individual machine records. This means that the tax is almost impossible to audit, and it will make it difficult to work out what the traders' normal tax liabilities are from the start.

Oh, and one more thing, there is no machine registration within the new HMRC system.

Problem?

Yes, the tax covers two categories of machines which therefore need to be known and identified.

Did HMRC warn HMT that this new tax won't work?

I am advised that they did, bit that the warnings have been ignored!

Sadly another accident waiting to happen, which will be blamed on HMRC (even though in this instance it appears not to be HMRC's fault).


Tax does have to be taxing.

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What is TAXWISE?

TAXWISE is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Taxwise



Tax Investigation for Dummies, by Nick Morgan, provides a good and easy to read guide for anyone caught up in an HMRC tax investigation. A must read for any Self Assessment taxpayer.

Click the link to read about: Tax Investigation for Dummies

HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

Consultation

FYI, from the HMRC site:

Two consultation documents on modernising HM Revenue & Customs (HMRC) powers, deterrents and safeguards are published today.

The first paper contains proposals for modernising and improving HMRC's information powers, and accompanying safeguards, in two key areas:

- bulk information powers – these allow HMRC to gather specific pieces of information about a group of taxpayers for use in risk analysis e.g. interest paid by banks without deducting tax; and

- specialist unnamed taxpayer powers – these allow HMRC, in certain tightly-described circumstances, to ask for information from a third party about an unnamed taxpayer, for example, to check a transaction where it’s not clear who the relevant taxpayer is.

The second consultation looks at ideas for a new and modernised excise checking framework, as well as ways of improving excise administrative procedures, in order to reduce admin burdens for business. The proposals cover excise duties on alcohol, tobacco, energy products, gambling duties and air passenger duty.

The consultations follow the introduction in April 2009 of a new compliance checking framework for a range of taxes, which brought in a new set of rules and safeguards for HMRC inspections, visits and enquiries across a range of taxes.

The consultation documents, and accompanying Impact Assessments, are available on the HMRC website at www.hmrc.gov.uk/consultations (click the "current consultations" option).

The deadline for submitting comments is 1 October 2009.

Tax does have to be taxing.

Professional Cover Against the Threat of Costly TAX and VAT Investigations

What is TAXWISE?

TAXWISE is a tax-fee protection service that will pay up to £75,000 towards your accountant's fees in the event of an HM Revenue & Customs full enquiry or dispute.

To find out more, please use this link Taxwise

Tax Investigation for Dummies, by Nick Morgan, provides a good and easy to read guide for anyone caught up in an HMRC tax investigation. A must read for any Self Assessment taxpayer.

Click the link to read about: Tax Investigation for Dummies

HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"