Upper Tribunal finds further free spins fell within the statutory RGD exclusion.
The Upper Tribunal has allowed part of Jumpman Gaming RGD appeal and ruled that no Remote Gaming Duty (RGD) liability arose in respect of the transactions forming the basis of HMRC’s assessments. The assessments, which covered accounting periods from 1 July 2018 to 31 December 2022 and were worth approximately £13.2 million, are to be reduced to nil.
The case concerned Jumpman Gaming Ltd’s online gaming platforms and its “Welcome Offer”. Customers who opened an account and made a qualifying deposit received a free spin on the Mega Reel. The Mega Reel could award prizes including further free spins on other games.
HMRC had assessed Jumpman to RGD in relation to the treatment of these promotional arrangements. The dispute centred on provisions introduced by the Finance (No. 2) Act 2017, particularly sections 159(4) and 159A of the Finance Act 2014.
Section 159(4) can treat participation under an offer waiving all or part of a gaming payment as involving a deemed gaming payment. Section 159A provides exclusions from that treatment in specified circumstances.
The First-tier Tribunal had concluded that the initial Welcome MR Spin did not fall within section 159(4). It also found that the further free spins won from the Mega Reel did not qualify for exclusion under section 159A(4) and (5).
The Upper Tribunal dismissed Jumpman’s first ground of appeal. It agreed that the FTT was entitled, on the evidence, to conclude that the Welcome MR Spin was a free game rather than a game for which an existing payment obligation had been waived.
However, the Upper Tribunal allowed the second and third grounds. It found that the FTT had been wrong to exclude HMRC’s 2016 consultation materials from consideration when interpreting the legislation. The tribunal held that such materials could form part of the relevant legislative background, although they could not override the statutory wording.
The key issue was the meaning of “the gaming” in section 159A(4)(b). HMRC argued that the phrase referred only to gaming undertaken pursuant to an offer waiving a gaming payment. Jumpman argued that it referred to remote gaming more generally.
The Upper Tribunal preferred Jumpman’s interpretation. It held that “the gaming” referred to the remote gaming identified in section 159A(4) and was not limited to gaming undertaken pursuant to an offer waiving payment.
The tribunal also found that HMRC’s interpretation would require a potentially extensive historical exercise to trace a later freeplay entitlement back through earlier transactions. It concluded that this tracing requirement did not emerge naturally from the statutory wording.
As a result, the further free spins awarded following the Welcome MR Spin fell within the statutory exclusion and did not give rise to RGD liability.
The tribunal held that the error in the FTT’s interpretation was material. With Ground 1 dismissed but Grounds 2 and 3 succeeding, the FTT’s decision was set aside to the extent required and remade. The Upper Tribunal concluded that no RGD liability arose in respect of either category of participation forming the basis of the assessments.