Spot the Ball owners Sportech win £40m VAT battle with HMRC

UK gambling giant Sportech has won its four year battle with HMRC over claims that it was incorrectly charged VAT on its well-known Spot the Ball game.

Sportech, owner of the Football Pools, says it expects to be paid around £80m from the taxman after winning its claim in the First-tier Tribunal's Tax Chamber.

The tribunal’s ruling brings to an end Sportech’s tussle with HMRC over a £40m VAT claim charged on the Spot the Ball game, which ran between 1979 and 1996.

Hugely popular in the 1970’s, Spot the Ball saw players look at a photograph from a football match and guess where the ball should be. In its heyday it regularly attracted around 3m players.

Sportech, which also wants to provide cricket pools in India, first lodged a claim in March 2009.

The central thrust of its claim was that it was incorrectly charged VAT on Spot the Ball as it is a game of chance and not a game of skill. Games of chance are free from VAT.

Sportech’s expectations are that once interest is added to the £40m it claims it overpaid in VAT, it will be owed around £80m – nearly half the company’s £180m market value.

HMRC has until the end of April to appeal the ruling, which was handed down by the First-tier tribunal’s tax chamber.

In a statement, Sportech said: ‘As a consequence of this ruling, Sportech will now enter into discussions with HMRC to agree the quantum of the claim. It is anticipated that the sum to be repaid to Sportech will be in excess of £40m of overpaid VAT plus simple interest which is expected to more than double the total sum receivable to more than £80m.

‘The group will update shareholders as soon as it is advised of HMRC’s intentions. The board of Sportech will continue to take appropriate legal and professional advice on the group’s position, and advise shareholders accordingly of the proposed course of action in the event that HMRC decides to appeal.’

A spokesman for HMRC, said: ‘HMRC is considering the decision carefully’.

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