HMRC have published Revenue & Customs brief 63/08 here http://www.hmrc.gov.uk/briefs/vat/brief6308.htm which confirms their view about the VAT liability of MCB and gaming machine takings.
In December 2005, UK law was changed to make takings from gaming machines taxable. Rank had appealed the VAT liability of income prior to this date on the basis that it should be exempt. Also in a separate case, Rank had appealed the VAT liability of MCB takings. In both cases, Rank won on the basis of fiscal neutrality, ie that the UK’s application of the EC legislation put Rank at a fiscal disadvantage and that the supplies concerned should be exempt from VAT.
HMRC are appealing the decisions of the Tribunals and the Brief confirms that the hearings at the High Court are likely to be in March/April this year. In the meantime, HMRC confirmed their view that takings from both types of gaming are liable to VAT.
The cases are interesting because of the EC aspect as it is rare that the issue of fiscal neutrality comes up in UK caselaw.