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Linneweber 1 case update - Rank loses Gaming Machine VAT case against H M Revenue & Customs

On the 30th October it was announced that the Rank Group, which is leading the lead test case against HMRC and is commonly known as Linneweber 1, had lost the case at the Court of Appeal. The European Court of Justice (ECJ) had previously sent back to the UK legal system appeals for VAT rebates in respect of gaming machines resulting from the ECJ decision in the German case, Linneweber. Rank has asked for permission to appeal this decision to the UK’s Supreme Court.
The UK Court of Appeal decided in favour of HM Revenue & Customs (HMRC) regarding claims for overpaid VAT on Club Gaming Machines between 2002 and 2005. In May 2010 HMRC paid Rank £30.8m in connection with these claims and Clubs which had applied for a refund should have already received this refund. This case does not have any bearing on gaming machines known as B3A machines. These machines will remain tax free.
If the Court of Appeals decision stands then this will be a setback for the Clubs involved as HMRC is likely to seek repayment of any monies previously paid out in relation to this case. It is important to note that the outcome of the legal process has still not reached its conclusion as Rank has applied for leave to appeal to the Supreme Court in connection with these claims. It is unlikely that HMRC will take any action until the legal proceedings have been fully completed. Therefore, the full effect of the Appeals Court decision on individual clubs will not be known until the Supreme Court has ruled on this matter. Unless Rank’s request to appeal to the Supreme Court is rejected it will still be quite some time before the final outcome of this case is known.
At this stage we are advising Clubs to be aware of the possibility that any money previously received in connection to Linneweber 1 may have to be repaid. There is, however, no time scale known for when such a repayment might take place. If Clubs have yet to spend the money received from Linneweber 1 then it is advisable to continue to hold onto the money. If Clubs have spent the money then it is advisable to be aware that a future liability for the money received may occur and to continue to place a provision in the Club’s accounts relating to this case and, if possible, prepare for a possible repayment. The ACC will assist any Club which is unable to make a repayment should a repayment become necessary.
This is, of course, a setback for Clubs and one which was not expected by most taxation experts. Should Rank be granted an appeal to the Supreme Court then the final decision in this matter will be taken by the UK’s Supreme Court and it will have the power to overturn the current decision made by the Court of Appeal.
We will keep you informed of developments. If in the meantime you have any queries, please do not hesitate to contact the ACC.

Club Websites and Getty
Images information

Clubs with websites should ensure that all the images used are either properly licensed or free from copyright and royalties. Many images which turn up through a simple Google search will still, in fact, be copyrighted. This means that if they are used without authorisation then the Club may end up having to pay damages to the copyright owners. Getty Images, one of the largest suppliers of copyrighted images, recently asked a Club to pay over £1,000 due to unauthorised use of one of their images.

Clubs are, therefore, strongly encouraged to make sure that the images contained on the Club’s website are legitimate. If any Club is concerned about the images they host then please let the ACC know and we will provide advice regarding the images. There are specific sites which offer copyright and royalty free images which can be used.

Late Night Levy Update

The Late Night Levy is an annual fee collected from premises authorised to sell alcohol between midnight and 06:00. If the Local Authority so chooses, all licensed premises within that jurisdiction will have to pay anywhere between £299 and £4,400 per annum, depending on the rateable value of the premises, for the privilege of selling alcohol between those times.

The Late Night Levy has already been introduced in Newcastle and other Councils around the Country are watching the effects of the introduction. Newcastle has also introduced a ‘best practice’ scheme which will reduce the cost of the levy on businesses as long as they follow specific guidelines. It is not known if this scheme will be replicated when other Councils adopt the Late Night Levy.

Milton Keynes has also adopted the levy although it will not be introduced until 1st May 2014.

A number of councils are currently consulting, or have already consulted, on whether to introduce the levy and no decision has yet been made. These include the following: Cheltenham, City of London, Plymouth, Tameside and York.

The following areas have not yet held a consultation on the Levy but are widely expected to at some point: Liverpool, Bristol, Camden, Chelmsford, Cheshire East, Islington, Lambeth, Leeds, and Woking.

If your area is not included in the above lists it means that neither a consultation nor an introduction of the Levy is planned at this stage.


Q The Club is a registered Industrial and Provident Society and we are considering investing in a ‘buy to let property’ in order to maximise returns on the Club’s surplus cash. Are we legally able to do this?

A There is no reason that the Club cannot own property and receive rental income from these properties.
We strongly suggest that the Committee carefully consider the finances of such an investment before proceeding and also it is important to consult with a qualified financial advisor.
Whilst most of the Club’s income is not taxed, rental income will have corporation tax applied to it. It is therefore important to consider this.
You should make sure that the yield that the Club is proposing to receive on the property is sufficient and in line with the area. The yield is the income received based on the capital expenditure. On a £200,000 property with rental income of £10,000 before tax the yield would be 5%. A rental income will have expenses attached to it so the Committee should also consider that in addition to the rental revenue received that there will, on occasion, be significant one off costs that should be paid for by the rental income.
The Committee should also consider alternative investment options. The ACC can offer the Club 2.5% gross if money is deposited with us. The Committee may also wish to look at long term bonds to see if there are any available which offer a suitable level of return. What the Club should not do is place money in any investment which carries significant risk.

Q A previous member expelled from the Club two years’ ago would like to reapply for membership. Can an expelled member reapply for membership?

A As it has been at least twelve months since this Member’s expulsion, the Committee are able, by a simple majority vote, to allow this person to reapply for Membership. This does not mean that the Member will then be re-admitted to the Club. They will still have to apply in the usual way and Club Members will be able to object to his nomination. Ultimately though it will be a Committee decision and two votes against his election will mean that his Membership application is rejected.
The key points are that the Committee do not have to allow him to reapply for Membership and if he is permitted to reapply for Membership then two votes against his admission, and the subsequent candidate election will prevent his application being successful. The Club’s Members are able to object to his application although ultimately the Club’s Committee Members make the final decision but they would be wise to take into account any objections received by Members.

Q One of our Members has approached the Committee with the idea of holding a charity bingo night in the Club and members of the public would be invited to attend. Can such an event be open to the public?

A We can confirm that should a Temporary Event Notice be obtained that the Club could host an event at which non-members could be admitted to and served alcohol.
The difficulty with the specific proposal that bingo is played during the course of the charity event is that the Club’s Gambling Licence only covers Members and Members’ guests. Whilst a TEN will allow you to serve alcohol to non-Members it does not allow them to partake in gambling on the Club’s premises. This means that persons who are neither Members nor guests of Members would not be able to play bingo inside the Club.
The Club would, however, be able to run a raffle (technically known as a Society Lottery) as long as all the proceeds went to a charity.
I understand that this may complicate the proposal for the event, however, it is important that the Committee ensures that when non-members are on the Club’s premises that the Club is still in compliance with the relevant legislation, which in this case is the Gambling Act 2005.


JANUARY Questions & Answers – Various
FEBRUARY Questions & Answers – Various
Machine Games Duty Update
Linnewebber 1 Update
MARCH Preparing for an Annual General Meeting
Machine Games Duty VAT Information
APRIL Questions & Answers – Various
Beer Duty Escalator
MAY Unfair Dismissal
Employers National Insurance
Alcohol Duty Changes
Membership Recruitment
Club Advertising
JUNE Questions & Answers – Various
JULY Questions & Answers – Various
Machine Games Duty Penalties for late filing
Performer Rights Society (PRS) Letters
Live Entertainment - HMRC
AUGUST Questions & Answers – Various
Employment Law Changes
Premier League Update
SEPTEMBER Questions & Answers – Various
Late Night Levy
TRI Relaxation Extended
OCTOBER Questions & Answers – Various
The Important Role of Sub-Committees
Liability for Lost or Stolen Property
Noise Pollution
NOVEMBER Questions & Answers – Various
DECEMBER Questions & Answers – Various
Linnewebber 1 Important Notice