Rank Group Urges UK Against Gaming Machine Tax Hike

In a formal response to the UK government's consultation on proposals to replace the existing taxation regime for gaming machines with a gross profits tax, Rank Group plc has urged HM Treasury not to further increase the tax burden of what the company states is already "the most heavily taxed gaming sector in Britain".

HM Treasury has said that it intends any changes to gaming machine taxation to be revenue neutral for the Exchequer, with a gross profits tax (GPT) replacing Amusement Machines Licence Duty and Value Added Tax.

In a letter to Sarah McCarthy-Fry MP, Exchequer Secretary to the Treasury, Rank said the imposition of a new taxation regime for machines, linked to gross profits, would be a "further unwelcome burden" at this difficult time economically.

Rank said that regardless of the rate of gross profits tax on introduction, there will be a number of additional costs to businesses in complying with a new set of rules, and has stated that the company's "strong preference would therefore be to maintain the current system."

Rank has previously stated that gaming machine gross profits tax would need to be set at a rate of 15% in order to be neutral for the company, a level consistent with the current rates of general betting duty, remote gaming duty, football pools duty and the starting rate of casino gaming duty.

The submission also confirms Rank's analysis of the effects on the company's profits should GPT be set higher than 15%. Rank estimates that it would incur at least £1 million per annum in additional taxation for every percentage point over the 15% neutral rate. Within Rank, these costs would mainly be borne by Mecca Bingo via its 103 bingo clubs.

The company added that if the Treasury was to pursue its lead option in imposing GPT, two considerations are vital. Firstly, that the rate is set with regard to the impact on businesses, and secondly, that a sufficient transition period is built in to allow the government to work with industry to ensure the system is introduced in a way that minimises compliance costs.

Should the GPT be introduced at the next budget, Rank said that it would immediately undertake a review of all supplier contracts, numbers of machines in operation, overall gaming product mix, future investment strategy and individual club profitability.

Shares in Rank Group plc (Co. Profile) (LSE:RNK) have gained 3.47% to 91.00 pence per share this morning in London.