London Clubs Management Ltd v Revenue & Customs [2014] UKFTT 1060 (TC)

FTT-Tax
London Clubs Management Ltd v Revenue & Customs
[2014] UKFTT 1060 (TC) · 2014-11-27
[11]“ … there is no ambiguity in the definition of ‘banker’s profits’. ‘The value, in money or money’s worth, of the stakes staked’ means what it says: it is the value of the chips risked in the relevant charging period. ”25. Before me, Mr Hitchmough submitted that Lipkin Gorman showed that cash chips were merely convenient symbols for the cash deposited by the player with the casino and put at risk (or staked) by him at the gaming table. Normal cash chips are worthless in themselves and their value is the money deposited with the casino that they represent. Mr Hitchmough contended that Briggs J in Aspinalls UT and Moses LJ in Aspinalls CA both recognised that the chip was merely a representation of the money deposited by the customer. He submitted that this was clear from the emphasis placed by Moses LJ’s in Aspinalls CA on the value put at risk in the game. Mr Hitchmough stated that the same approach leads to the conclusion that the Non-Negs have no value because the player staking a Non-Neg has not deposited any money with the casino in respect of it and is not risking anything of value in the game. A player staking a No-Neg cannot be said to be gambling with money or anything of value. Mr Hitchmough accepted, as he had in Aspinalls UT , that if one player gave a cash chip to another player (say a £50 cash chip), the use of the £50 cash chip by the donee in a game would be a stake of £50 for the purposes of gaming duty: see Aspinalls UT at [31]. He said that was because the cash chip represented the money deposited by the other player and it was that money that was risked in the game.26. Ms Wilson submitted that Aspinalls UT and Aspinalls CA did not assist LCM. She contended that, by his reference, at [35], to section 11(10)(a) assuming an “objective ascertainment of value”, Briggs J meant that the value in money or money’s worth of a stake staked is given by the “stake staked” itself. If a £20 Non-Neg is staked as a stake in a casino game, the value in money of the stake is £20. She submitted that using any other value would be using a value derived from a perception of value to the player or the banker, which Briggs J had rejected. Ms Wilson also contended that, at [8] of Aspinalls CA , Moses LJ distinguished between the stake as the amount risked in connection with the game (the stake staked) and the cost to the player of that stake (the amount risked after payment of commission). Moses LJ stated clearly that amounts paid by way of commission do not alter the value put at risk in the game, i.e., the stake staked, although such commission reduced the value risked by the player.27. Mr Hitchmough emphasised Moses LJ’s use of the word risk in Aspinalls CA and linked it to the description of the character of a chip in Lipkin Gorman to support his submission that a Non-Neg had no value as a stake because it did not represent money deposited with the casino. He contended that the player risked nothing when playing with a Non-Neg because it was a free bet. I do not accept that submission. In this case, the Non-Negs have a monetary face value. The fact that the player does not risk losing any money does not mean that the Non-Neg does not have any value in money when used as a stake in a casino game. If the player makes a winning bet then the monetary value stated on the Non-Neg is used to calculate the player’s winnings in cash chips. If the player makes a losing bet then the player does not lose any money but no longer has the right to bet the monetary value stated on the Non-Neg for free. In the language of section 11(10(a) FA97, the amount stated on the Non-Neg is the value, in money, of the stake staked with the banker in the game.28. I do not regard the judgments in the Aspinalls appeals as supporting a different analysis. The cash-backs and commissions paid by the Club to certain high-rollers for staking stakes in games on the premises did not affect the “stakes staked” with the banker in the gaming, nor the value in money of “the stakes staked” in the game. It seems to me that the value, in money or money’s worth, of the stake staked is the value of the stake as staked and not the value as determined by some other agreement or circumstance. In my view, that is what Briggs J meant in Aspinalls UT when he held that section 11(10)(a) FA97 assumes an objective ascertainment of value. I do not consider that Moses LJ in Aspinalls CA applied anything other than an objective assessment of value when he talked about “the value put at risk”. In that case, the player had deposited money with the Club in relation to the chips used and so that money was at risk when those chips were staked. In using the word “risk”, it seems to me that Moses LJ was doing no more than reflecting the facts of that case. In my opinion, the learned judge was not saying that where a player has no money at risk when he stakes a stake then that stake has no value in money for the purposes of section 11(10(a). In fact, it appears to me that Moses LJ made the position clear at [8] when he said:
“The value in money or money's worth of the stakes staked is the face value of the chip.” 29. In my view, the objectively ascertained value for the purposes of section 11(10)(a) FA97 of a chip staked as a stake in a casino game is the face value of the chip. I consider that it is irrelevant whether a stake staked by a player is given to him or her free of charge. It must follow (and this was part of Ms Wilson’s analysis) that the same value is to be used for the prizes provided by the banker for the purposes of section 11(10)(b). I have concluded that the value of the Non-Negs, in money or money’s worth, for gaming duty purposes is their face value and that value should be included as stakes staked and prizes provided in calculating LCM’s banker’s profits under section 11(10). In the case of a £5 Non-Negotiable Chip that value would be £5. In the case of the roulette straight bet voucher with the stated value of £0.01p and the enhanced odds of 5,000 to 1, the value of the stake staked would be £0.01p. 30. I do not think that there is any distinction for these purposes between those Non-Negs (the one-hit free bet vouchers) that can only be used to make one bet and the other types of Non-Negs. In both cases, the amount of the stake staked with the banker is the monetary amount stated on the Non-Neg. 31. Until now, I have only considered Mr Hitchmough’s submissions on the provisions of the FA97. Mr Hitchmough’s skeleton also sought to draw support from some VAT cases in relation to free gifts and promotions but, at the hearing, he acknowledged that they did not provide any great assistance beyond indicating that if a customer obtains something for free then it is treated as free for the purposes of VAT. I think that Mr Hitchmough was right not to rely on the VAT cases as VAT is a different tax to gaming duty and has its own rules about value for VAT purposes. 32. Mr Hitchmough also referred to the way in which free bets are dealt with for the purposes of other profits-based taxes on betting and gaming. In particular, Mr Hitchmough relied on the fact that free bets are expressly excluded for the purposes of calculating remote gaming duty under the Betting and Gaming Duties Act 1981 (“BGDA 1981”). Section 26C(1) of the BGDA 1981 charges duty on the promoter’s “remote gaming profits”, which are defined by section 26C(2) as his “remote gaming receipts” minus his “expenditure ... on remote gaming winnings”
. Section 26E(1)(b) defines remote gaming receipts as “amounts staked, or falling due to be paid ... by a user of facilities for remote gaming”. Section 26E(3) BGDA 1981 provides that: “The Treasury may by order provide that where a person who uses facilities (U) relies on an offer which waives payment or permits payment of less than the amount which would have been required to be paid without the offer, U is to be treated for the purposes of this section as having paid that amount.” 33. Mr Hitchmough submitted that the remote gaming duty legislation is materially similar in structure to the gaming duty legislation. In relation to remote gaming duty, the draftsman has recognised, in express terms, that free bets should not ordinarily be included within the charge to tax. Ms Wilson submitted that the remote gaming legislation provides for a different and separate regime to gaming duty on terrestrial casino games and it is not possible to use the former to interpret the latter from the point of view of construction or policy. 34. In relation to various other duties (general betting duty, bingo duty and machine games duty), Mr Hitchmough’s submission was essentially that where they taxed fictitious profit, they did so explicitly. Gaming duty did not do so and should not be interpreted as if it had. Ms Wilson submitted that the other duties should be construed in their own statutory context and it is not possible to read across from one provision to another in the absence of an express provision. 35. I accept Ms Wilson’s submissions in relation to remote gaming duty and the other duties. In my view, it is not possible to interpret section 11(10) FA97 relating to gaming duty by reference to provisions in other statutes relating to other duties without an express provision authorising such a cross-referencing. 36. Mr Hitchmough also submitted that section 11(11) FA97 gives the Treasury the power to amend the definition of banker’s profits so as to include free bets such as Non-Negs, but that it had chosen not to do so. Ms Wilson’s response to this point was that the existence of a general power to amend legislation does not tell us what the current legislation means. I agree with Ms Wilson on this point and draw no assistance from section 11(11) FA97 in determining the value of the Non-Negs, in money or money’s worth, for gaming duty purposes. Decision 37. For the reasons set out above, LCM’s appeal is dismissed. Right to apply for permission to appeal[38]This document contains full findings of fact and reasons for the decision. Any party dissatisfied with this decision has a right to apply for permission to appeal against it pursuant to Rule 39 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009. The application must be received by this Tribunal not later than 56 days after this decision is sent to that party. The parties are referred to “Guidance to accompany a Decision from the First-tier Tribunal (Tax Chamber)” which accompanies and forms part of this decision notice. GREG SINFIELD TRIBUNAL JUDGE RELEASE DATE: 27 November 2014

Cited in 2 later judgments