Machine Games Duty

Napthens - November 1st 2012

Machine Games Duty (MGD), a new taxation system for gaming machines, will soon be replacing the existing system (Amusement Machine Licence Duty / VAT). This new system comes into force on 1st February 2013, but those liable are required to register for MGD between 1 November 2012 and 1 January 2013. 

MGD will be chargeable on all machines where the cash prize is greater than the cost to play (the stake). The rate charged will be 20% of net machine takings where the stake is over 10 pence and the prize is over £8.00. There is a reduced rate of 5% payable for machines where the maximum stake is 10 pence and the biggest cash prize is £8.00. It should be noted that tickets or vouchers that are paid from machines and then redeemable for cash are classed as cash prizes for this purpose. 

The responsibility of registering for MGD depends on how the premises is run. In the case of a managed premises, then the company managing the premises is the registerable person, usually the premises licence holder. However, if the premises is tenanted or leased, then the registerable person is the lessee / tenant. If that tenant / lessee fails to register for MGD and operates machines on the premises, then they will remain liable. If the pub company wishes to act as an agent to their tenants then they can do so, as long as they have consent from the tenant. 

Clubs holding a club premises certificate will work slightly differently. It will usually be the club that is liable to register for MGD, but if they fail to register, then the MGD liability could fall on to the supplier if the profits are shared. This is because club officials or members cannot become personally liable for the club's MGD. We would urge suppliers to make sure that any clubs they supply have registered for MGD.