A ruling in favour of Jumpman Gaming has offered a new avenue for UK operators to contest the application of remote gaming duty (RGD).
The UK’s Upper Tribunal ruled that free spins won during the firm’s Mega Reel game should not be subject to RGD, as previously argued by HM Revenue and Customs and ruled by the First-tier Tribunal (FTT).
The Upper Tribunal’s ruling was described as ‘very surprising’ by law experts as the rules of the Finance Act 2014 provide a distinction between paid games, played for free and always free-to-play games, such as Mega Reels.
Though the judges in the case conceded that the interpretation of the legislation could point in both directions, the court fell on the side of Jumpman’s argument that a free spin won from any form of remote gaming should be exempted from RGD.
Bryn Reynolds, VAT expert at Pinsent Masons, described the court’s judgement said the ruling appeared to ‘defeat the purpose of the 2017 amendments’ to the Finance Act, which brought in exemptions for free spins awarded as prizes of certain types of games.
Meanwhile, Stephen Hignett, Partner at CMS UK, said that operators will now be considering the tax status of their own portfolio of similar promotions.
He said: “HMRC has recently been assessing operators to RGD in respect of games which are always free to play. Such assessments have treated the subsequent use of the free spins won as subject to RGD.
“If the Upper Tribunal’s decision is not successfully appealed by HMRC, operators should be seeking to obtain repayment of RGD where relevant and/or have such assessments withdrawn.”
Jumpman Gaming pursued a ruling through the courts after being left with a tax liability of £13.2m for the accounting period between 1 July 2018 and 31 December 2022.
If HMRC is unsuccessful in a subsequent appeal, the decision will be welcome relief for the UK-based studio, which is part of Super Group after the owner of Betway acquired a majority stake in the studio in September 2022.