Jumpman Gaming Ltd v The Commissioners for HMRC [2025] UKFTT 1117 (TC)

[2025] UKFTT 01117 (TC)Case No TC09643
FIRST-TIER TRIBUNAL
TAX CHAMBER
Hearing Heard on: 26 and 27 August 2025Date Judgment date: 16 September 2025
Taylor House, London
Appeal reference: TC/2023/00851
REMOTE GAMING DUTY - whether taxpayer assessable to duty on spin of promotional game or subsequent spins of other games won following the promotional game, or on neither – application of section 159A Finance Act 2014 – duty due on subsequent free spins – appeal dismissed
Before
TRIBUNAL JUDGE AMANDA BROWN KCPROF DR PHEBE MANN
Between
JUMPMAN GAMING LTDAppellantTHE COMMISSIONERS FOR HIS MAJESTY’S REVENUE AND CUSTOMSRespondentMr Kevin de Haan KC of counsel, instructed by Ampla Consulting Ltd. for AppellantMr Matthew Donmall of counsel, instructed by the General Counsel and Solicitor to HM Revenue and Customs for RespondentsDECISION

Introduction

[1]This appeal concerns assessmentsraised by HM Revenue & Customs (HMRC) pursuant to section 12 Finance Act 1994 (FA94) in respect of remote gaming duty (RGD) said to have been under-declared by Jumpman Gaming Ltd (Appellant). The assessments were originally issued on the following dates for the identified periods:(1) 29 September 2022 for Q3 2018 (Assessment 1)(2) 20 December 2022 for Q4 2018 (Assessment 2)(3) 20 March 2023 for Q1 2019 – Q4 2022 (Assessment 3) (collectively Assessments).[2]As set out further below, the Appellant offers new customers, who have made an initial deposit into their online gaming account, the opportunity, at no cost to the player, to play the “Mega Reel” (MR Spin). As a consequence of the MR Spin, the customer may win free spins on other games (Free Spins) offered through the Appellant’s platform. The Assessments were raised in consequence of HMRC’s decision that RGD was due from the Appellant in connection with participation in remote gaming by way of the Free Spins rather than the MR Spin in consequence of the application of section 159A FA14.[3]Assessments 1 and 2 were subject to review by HMRC prior to appeal; Assessment 3 was not reviewed. The Assessments were each issued on the information available to HMRC at the time of the issue. As further information was provided, and following a review of the calculations, the Assessments were amended. The total sum HMRC claims to be due on Free Spins following the various amendments was £13,282,320. On 1 July 2025, the Appellant provided HMRC with information concerning the amount of RGD accounted for on MR Spins. HMRC accept that if they are successful on the substantive issues in the appeal the Assessments will need to be reduced to account for the RGD overpaid on the MR Spins.[4]The Appellant challenges the basis of the Assessments, contending that it correctly accounted for RGD in respect of the MR Spin and no RGD is due on the Free Spins. The Appellant also argues that the manner and form of the amendment to Assessment 3 had the effect of withdrawing and reissuing it, such that the notification of the recalculated Assessment 3 was made out of time, rendering Assessment 3 invalid. Subject to the validity argument for Assessment 3, the Appellant accepts that if the liability to RGD is as asserted by HMRC there is no challenge to the quantum of the Assessments.[5]We are grateful to Counsel and those instructing them for their detailed preparation and presentation of this appeal, including their engagement with the Tribunal in questions intended to ensure a thorough understanding of their case. We assure the parties that, in preparing this judgment, full account has been taken of the documents to which we were taken, skeleton arguments and oral submissions. With a view to ensuring a succinct judgment we have summarised their positions.[6]For the reasons set out below we dismiss the appeal.

Evidence and findings of fact

[7]We were provided with a bundle of documents comprising 670 pages (as accepted by Mr de Haan, many of which were duplicated chains of emails) and witness statements from Mr Alexander Marsden (on behalf of the Appellant) and Mr Steven Mack (on behalf of HMRC). Mr Mack’s statement was accepted, and while Mr Marsden was subject to cross-examination, there was no substantive dispute with his evidence.[8]In this appeal, the Appellant bears the burden of proving that the Assessments overstate its liability to RGD. They must do so on the balance of probabilities.[9]From that evidence, we are able to find the following facts, which we split into two sections: the facts concerning the operation of the Mega Reel and those concerning Assessment 3.

Mega Reel

[10]The Appellant offers the opportunity to participate in remote gaming to customers (Customers)located in the UK; it is therefore subject to the system of RGD in respect of participation by such Customers.[11]Gaming on platforms operated by the Appellant is subject to terms and conditions which, so far as relevant, provide:(1) By registering on one of the Appellant’s websites Customers are entering into a contractual relationship with the Appellant.(2) Deposits of money are made by Customers into their online accounts (deposits cannot be made by credit card).(3) Promotional offers are offered to Customers through the use of the Mega Reel.(4) Pursuant to any promotional offer, participation is through a pop-up box. If the pop-up box is closed without participation, the opportunity to participate is lost.(5) One such offer is the “Welcome offer” which is provided on the basis that the Customer “will receive a FREE spin of the ‘Mega Reel’” which offers “Prizes varying from Free Spins to Amazon Vouchers.”(6) The minimum deposit requirement for the Welcome offer is £10 unless otherwise stated.(7) Promotional offers generally may be provided for free or on the payment of a small fee which is displayed on the game.(8) In addition to the Welcome offer the opportunity to participate in the Mega Reel was offered by invitation to Customers. Such invitations may be for free participation or require the payment of a small amount.(9) Customers are notified that the Mega Reel is a game of chance and that winning a prize was not guaranteed.(10) Wins with a cash value resulting from promotional offers and Free Spins are credited to the Customer’s account as bonus cash which cannot be withdrawn unless and until it has been re-wagered 65 times and subject to a maximum of the lower of £250 to total lifetime deposits.(11) Wagering will be from deposited funds in preference to bonus cash.[12]In accordance with the terms and conditions and pursuant to the Welcome offer, when opening an account and upon depositing £10, a mini screen or pop-up box appears enabling an MR Spin. We were shown three visual configurations of the pop-up. Each identified itself as “Mega Reel” and showed an image of a reel. The prizes visible on each of the reels were free spins on an identified game offered by the Appellant (King Kong Cash, Fluffy Favourites, Chilli Heat). At the bottom of each box in small text is “spin value £0.xx” for the three in our bundle, the values were £0.01, £0.05, and $0.10. Mr Marsden accepted that the spin value was a notional sum fixed by the back office; it could be fixed at any value without affecting the Customer experience of the Welcome offer.[13]Superimposed over the reel is a “play” icon (a white circle with a green arrowhead triangle in the middle).[14]Approximately 3 – 4 times per year the Appellant sends customers invitations to participate in Mega Reel on a paid for basis. We were shown what was said to be an email of one such invitation. On examination of the email, we are not convinced it was such an invitation. Whilst it said:
“spin for pennies” it also plainly stated that no deposit was required, the customer was invited to “just log in and spin”
. Nevertheless we accept the Appellant’s evidence that it sends invitations periodically and infrequently for existing customers to participate in the Mega Reel on a paid basis but that the Mega Reel was not otherwise a standardly available game.[15]The prizes on the Mega Reel (whether offered for free or on a paid basis) are configured in the Appellant’s back office from a range of variables. We were provided with three lists of such variables. They included different value Free Spins on identified games (as per those referred to in paragraph (3) above) ranging from 10 – 500 together with £10 Amazon Vouchers and on one possible configuration real cash in amounts from £10 to £100. Each reel also has a ‘spin again’ and an ‘unlucky’ segment. The back office will assign an identified prize to each of the 8 segments of the reel. There will always be a spin again and an unlucky segment. The configuration also requires the back office to fix the stated spin value.[16]Mr Marsden did not know whether the outcome of the MR Spin was determined on a 1 in 8 basis or whether the outcomes were weighted. Unlike standard games, the Mega Reel did not separately disclose the rules of the game, the prize to stake ratio or the set return to player. He accepted that the outcomes of the MR Spin would not vary depending on the spin value attributed to the configuration. However, he believed that a Mega Reel with a higher spin value may have prizes of greater value. We had no corroborating evidence to verify or counter this view and we therefore accept it.[17]When the Customer chooses to participate in an MR Spin the amount identified as the spin value is credited by the Appellant to the Customer’s bonus cash account as “win”, it is then immediately debited from that account as a “wager”. The “win” and “wager” are thereby instantaneously offset. Where Free Spins are won as a consequence of the MR Spin, they are credited to “free spins”, which are neither part of the bonus cash account nor the real cash account.[18]RGD is accounted for on the spin value for each MR Spin.[19]When a Customer is invited to participate in Mega Reel otherwise than as an MR Spin i.e. where participation requires a wager, the wager price is debited from the customer’s account (deposited cash in preference to bonus cash). If the Customer wins Free Spins, those spins, and the wager are credited to “free spins” and “wager bonus” respectively.[20]Where a Customer participates in one of the standard games, it is on the basis that the gaming payment required to participate is notified to the Customer. When the Customer chooses to participate using a Free Spin won through the MR Spin, rather than by way of wager, the “free spins” account is debited. There are no debit or credit entries to the real or bonus cash accounts unless the Free Spin results in a cash win, at which point the value won is credited to the Customer’s bonus cash account.[21]We therefore discern that in terms of the account entries there is a difference between an MR Spin and Free Spin.[22]The Appellant does not account for RGD on the waived wager for a Free Spin.

Assessment

[23]When Mr Mack made the Assessments, he did so having reached the view that the Appellant had incorrectly calculated gaming payments due on the Free Spins. The quantum of the Assessments was calculated on the basis of the only information he had available to him as to the number of Free Spins and the associated wagers which had been waived. This information was limited to the number of Free Spins provided by two of a total of 10 games in which Free Spins had been provided. Based on these two games only he extrapolated to determine the number of Free Spins provided across all ten games. Mr Mack also lacked the information which would have enabled him to calculate the value of the gaming payment the Appellant had declared on the MR Spins. In making the Assessments, he made a number of calculation errors which required to be corrected.[24]Following the receipt of the Free Spin data provided by the Appellant in respect of a further six providers the Assessments for Q1 2019 – Q4 2022 were recalculated and reduced. The letter, dated 21 May 2024, notifying the reduction in the Q1 2019 – Q4 2022 Assessments stated:
“HMRC have reviewed the assessment to excise duty … notified to you on 30 March 2023 now [sic] reduce the total of those assessments as follows: … These have been reduced as upon review of the case so far, the figures had not been calculated to best judgment based on the figures available.”
[25]Prior to the hearing HMRC had made no adjustment to the Assessments in respect of the RGD accounted for on the MR Spin. HMRC accepted that such an adjustment was appropriate, but the Appellant had consistently failed to provide any evidence of the sums accounted for on the MR Spins. That information was finally provided on 1 July 2025. It had not been verified by HMRC at the time of the hearing, but HMRC accept that on the basis of it, an adjustment will be made if the Assessments are upheld.

Relevant legislation

[26]Unless otherwise stated all statutory references are to FA14.[27]Section 12 FA94 uncontroversially provides for HMRC to raise assessments to excise duty, including (pursuant to section 167(3) FA14) RGD where there is an omission from or inaccuracy in any return, account, book, record, or other document required to be kept. Such assessments are to be made to the best of HMRC’s judgment and shall not be made more than the later of(1) 4 years or(2) 1 year after the date on which evidence of fact, sufficient in the opinion of the commissioners to justify the assessment, comes into their knowledge.[28]Chapter 3 provides for RGD. The relevant provisions are:
“155 Remote Gaming Duty (1) A duty of excise, to be known as remote gaming duty, is charged on a chargeable person's participation in remote gaming under arrangements (whether or not enforceable) between the chargeable person and another person (referred to in this Part as a “gaming provider”). (2) In this Part “chargeable person” means— (a) any UK person … 157 Profits on ordinary gaming (1) To calculate the amount of a gaming provider's profits for an accounting period in respect of ordinary gaming— (a) take the aggregate of the gaming payments made to the provider in the accounting period in respect of ordinary gaming, and (b) subtract the amount of the provider's expenditure for the period on prizes in respect of such gaming. … 159 Gaming payments (1) Where a chargeable person participates in remote gaming, the “gaming payment” for the purposes of this Chapter is the aggregate of— (a) any amount that entitles the person to participate in the gaming, and (b) any other amount payable for or on account of or in connection with the person's participation in the gaming. … (4) For the purposes of this Chapter— (a) where the chargeable person participates in the remote gaming in reliance on an offer which waives all of a gaming payment, the person is to be treated as having made a gaming payment of the amount which would have been required to be paid without the offer (“the full amount”), and …. (5) Where a person is treated by subsection (4) as having made a gaming payment, the payment is to be treated for the purposes of this Chapter— (a) as having been made to the gaming provider at the time when the chargeable person begins to participate in the remote gaming to which it relates, and (b) as not having been— (i) returned, or (ii) assigned to a gaming prize fund. (6) … (7) This section has effect subject to section 159A. 159A Play using the results of successful freeplay (1) Where a chargeable person participates in remote gaming, an amount is not to be taken into account in determining the “gaming payment” (if any) under section 159 so far as the amount is paid out of money in relation to which the first and second conditions are met (“excluded winnings”). (2) The first condition is that the money has been won by participation in the gaming either— (a) in reliance on an offer which waives all or part of a gaming payment, or (b) in a case where the gaming payment was paid out of money in relation to which this condition and the second condition were met. (3) The second condition is that the chargeable person is not entitled to use the money otherwise than for the purpose of participation in the gaming. (4) Subsection (5) applies where— (a) a chargeable person participates in remote gaming in reliance on an offer which waives all or part of a gaming payment, and (b) that offer has been won in the course of the person's participation in the gaming (and the person was not given the choice of receiving a different benefit instead of the offer). (5) The amount which would, apart from this subsection, be treated by section 159(4)(a) or (b) as a gaming payment (or additional gaming payment) is not to be so treated. … (7) In this section “money” includes any amount credited and any other money's worth. 160 Prizes … (5) Where a prize is a voucher which— (a) may be used in place of money as whole or partial payment for benefits of a specified kind obtained from a specified person, (b) specifies an amount as the sum or maximum sum in place of which the voucher may be used, and (c) does not fall within subsection (4), the specified amount is the value of the voucher for the purposes of sections 156 and 157. 160A Prizes: freeplay … (2) Where a prize is a voucher which gives the recipient a choice of using it in place of money for freeplay or as whole or partial payment for another benefit, section 160(5)(b) has effect as if after “used” there were inserted “ if it is used as payment for a benefit other than freeplay ” 3) In this section— “freeplay” means participation, in reliance on a freeplay offer, in— (a) remote gaming, or (b) an activity in respect of which a gambling tax listed in section 161(4) is charged; “freeplay offer” means an offer which waives all or part of— (a) a gaming payment, or (b) a payment in connection with participation in an activity in respect of which a gambling tax listed in section 161(4) is charged.” (a) any UK person (a) take the aggregate of the gaming payments made to the provider in the accounting period in respect of ordinary gaming, and (b) subtract the amount of the provider's expenditure for the period on prizes in respect of such gaming. (a) any amount that entitles the person to participate in the gaming, and (b) any other amount payable for or on account of or in connection with the person's participation in the gaming. (a) where the chargeable person participates in the remote gaming in reliance on an offer which waives all of a gaming payment, the person is to be treated as having made a gaming payment of the amount which would have been required to be paid without the offer (“the full amount”), and …. (a) as having been made to the gaming provider at the time when the chargeable person begins to participate in the remote gaming to which it relates, and (b) as not having been— (i) returned, or (ii) assigned to a gaming prize fund. (a) in reliance on an offer which waives all or part of a gaming payment, or (b) in a case where the gaming payment was paid out of money in relation to which this condition and the second condition were met. (a) a chargeable person participates in remote gaming in reliance on an offer which waives all or part of a gaming payment, and (b) that offer has been won in the course of the person's participation in the gaming (and the person was not given the choice of receiving a different benefit instead of the offer). (a) may be used in place of money as whole or partial payment for benefits of a specified kind obtained from a specified person, (b) specifies an amount as the sum or maximum sum in place of which the voucher may be used, and (c) does not fall within subsection (4), (a) remote gaming, or (b) an activity in respect of which a gambling tax listed in section 161(4) is charged; “freeplay offer” means an offer which waives all or part of— (a) a gaming payment, or (b) a payment in connection with participation in an activity in respect of which a gambling tax listed in section 161(4) is charged.”

The issues

[29]The issues in this appeal are narrow.[30]The first issue (Liability Issue) is in two parts:(1) The parties dispute whether participation by a Customer in an MR Spin is “in reliance on an offer which waives all of the gaming payment … which would have been require to be paid without the offer” thereby meeting the terms of section 159(4) (Waiver Part).(2) If it does, HMRC accept that the Appellant correctly accounted for RGD on the spin value of the MR Spin as a gaming payment and that the waiver of the wager otherwise required when participating by way of the Free Spins is properly excluded from being treated as a gaming payment by section 159A. However, the Appellant contends that even if there has been no waiver of the gaming payment for participation in the MR Spin the circumstances of participation in a Free Spin meet the terms of section 159A(4) such that pursuant to section 159A(5) the amount which would have been payable but for the Free Spin is nevertheless excluded from the calculation of aggregated gaming payments (Exclusion Part).[31]The second issue (Validity Issue)concerns only Assessment 3. The Appellant contends that by their letter of 21 May 2024 HMRC withdrew Assessment 3 and purported to reissue it but were out of time to do so. Liability issue Approach to statutory interpretation

Liability issue

[32]The Liability Issue turns on the interpretation of sections 159 and 159A it is therefore appropriate that we deal first with the correct approach to be adopted. Parties’ submissions[33]The Appellant submits there is nothing controversial or complex with the approach we were required to adopt. We are invited to discern the intention of Parliament in enacting the legislation we are to apply from the words used by reference to the well-documented purpose or mischief which the legislation intended to address. It was contended, in this regard that we could and should therefore use the consultation paper issued in August 2016 on the provisions introduced in 2017 and with which we are concerned, together with the governmental response to the consultation, guidance issued by HMRC on the operation of the provisions and the explanatory note to the clauses.[34]HMRC’s submissions were more nuanced. They accepted the position adopted by the Appellant. Still, they urged us to specifically construe the provisions of section 159A by reference to the heading of the section through which we could legitimately import the statutory definition of a “freeplay” as provided for in 160A(3). The heading so construed framed the scope of the provision. In this regard we were referred to the House of Lords judgment in R v Montila [2004] UKHL 50.[35]Generally, we were referred to the recent Supreme Court judgment in For Women of Scotland Ltd v Scottish Ministers [2025] UKSC 16 (Women of Scotland). Discussion[36]We start with Women of Scotland which scopes the approach we are required to adopt. In particular it assists us in framing what we can and cannot use when seeking to interpret the relevant statutory provisions we have to construe.[37]In Women of Scotland the Supreme Court confirmed that the general approach to statutory interpretation is well established. It adopted and expanded on the approach taken by the Court in R(O) v Secretary of State for the Home Department [2022] UKSC 3 (R(O)). We summarise paragraphs 8 – 14 as establishing that we are seeking the meaning of the words which Parliament used in the particular context in which they are so used. The meaning of the words used must be interpreted so as to provide a “coherent, stable and workable outcome … that is constant and predictable” thereby enabling citizens to understand parliamentary enactments simply by reading them. Thus, the primary resource for interpretation is the words themselves. Some of the words will be interpreted by reference to their ordinary meaning as determined from the context of the provision as a whole, the group of provisions of which the specific provision is a part and the Act as a whole thereby requiring the same word used more than once to have the same meaning, (unless the context otherwise requires). Words which are statutorily defined will bear the defined meaning which is likely to apply wherever the words are used, again subject to context. Where the language adopted is unclear or ambiguous it may be appropriate to consider aids, external to the act itself, to determine the intention of Parliament in choosing the statutory language. Such aids as are specifically identified by the Court (albeit by reference to language indicating the list to be illustrative/non-exhaustive) appear to be limited to material with a parliamentary origin (commission reports, white papers, explanatory notes etc). The Court is clear that such external aids are secondary resources and likely to only be needed where the language used is unclear, ambiguous or results in an absurdity.[38]In the context of determining what external aids we might permissibly use we note that in R(O) the majority of the Court referenced materials produced by or for Parliament. In her concurring judgment Lady Arden indicated that recourse to other pre-legislative material can be appropriate and that the only substantive restriction on what may be useful is that it should be of an official nature. This more liberal approach was not adopted by the other members of the Court in R(O) and has not been referenced in For Scottish Women. We see there is a clear distinction between material of the type listed by the majority in R(O) and endorsed in For Scottish Women and “pre-legislative material” generally. In the context of a requirement that legislation should be capable of being interpreted by reading it, it is to be expected that the external aids should be limited to those resources that were prepared by or for Parliament concerning the mischief to which the legislation is addressed or by way of explanation of it.[39]Based on the above analysis we consider that we are limited to using the Explanatory Notes as external aids. Whilst the consultation, response and guidance are pre-legislative material they were not prepared for or by Parliament. Accordingly, we do not take them into account. As explained in For Scottish Women, if we consider the language used by Parliament to be clear, unambiguous, and not leading to an absurdity we will have no need to consider even the Explanatory Note.[40]If we decide we need to use the explanatory notes to resolve an issue of clarity or ambiguity, then, as confirmed in R (oao PACCAR Inc and others v Competition Appeal Tribunal and others [2023] UKSC 28, we need to recognise that the explanatory notes play a “secondary role … inform[ing] the assessment of the overall purpose of the legislation” (see paragraph 42). Further, as confirmed by the Court of Appeal in R (ono McConnell) v Registrar General for England and Wales [2020] EWCA Civ 559, if there is an inconsistency between the terms of the explanatory notes and the language adopted in the legislation the aids are incapable of altering the true interpretation of the statutory provision (see paragraph 37). Finally, the Court of Appeal has clearly stated in R (oao Kaitey) v Secretary of State for the Home Department [2021] EWCA Civ 1875 that, when undertaking the exercise of statutory interpretation, the courts (and tribunals) should “resist attempts to elevate the [aids] to a status where they supplant the language of the legislation itself. This is not least because, as the [explanatory notes] themselves state, they are prepared by the Government in order to assist the reader in understanding the Act but do not form part of the Act and have not been endorsed by Parliament”.[41]In Women of Scotland the Court is silent on the question of the role of headings. In Montila, to which we were referred by HMRC, the House of Lords stated that the heading to a provision provides part of the interpretive context. In Lipton v BA CityFlyer Ltd [2024] UKSC 24 the Supreme Court acknowledged the use of headings as an aid to interpretation but appeared to limit their use to a situation in which the language of the statute was ambiguous and aligned the use of headings with “external aids” to interpretation. At paragraph 231 the Court endorsed the warning provided by the editors of Craies on Legislation 12th ed (2020) at paragraph 26.1.9 that cautions: “treating headings as if they were part of the text of the Act. They point out that the authorities of both Houses do not regard them as part of the Bill before the House, and therefore permit their informal amendment more or less at the will of the drafter. They conclude : ‘It would therefore be quite wrong to regard a heading as part of the text that expresses the settled will and intention of Parliament.’ Similarly, the editors of Bennion, Bailey and Norbury on Statutory Interpretation para 16.7 state: ‘Where a heading differs from the material it described, this puts the court on inquiry, but it is most unlikely to be right to allow the plain meaning of the words to be overridden purely be reason of a heading’”. ‘It would therefore be quite wrong to regard a heading as part of the text that expresses the settled will and intention of Parliament.’ ‘Where a heading differs from the material it described, this puts the court on inquiry, but it is most unlikely to be right to allow the plain meaning of the words to be overridden purely be reason of a heading’”.[42]In light of this clear statement we propose to treat the heading of the provisions we interpret as an external aid to which we are entitled to turn in the same circumstances in which we may use the explanatory notes to Finance (No. 2) Bill 2017 (FA17). In particular and in light of the cases referred to in paragraph 40 we should not, in our view, permit ourselves to seek to interpret a heading so as to facilitate an interpretation of the section for which it is the heading.

Statutory context of the relevant provisions of Part 3 Chapter 3

[43]We start by summarising the shape and structure of Part 3 FA14 to set the context for Chapter 3. Part 3 provides the statutory infrastructure for the taxation of remote gaming. FA14 does not provide the statutory infrastructure for casino gaming which is taxed pursuant to sections 10 – 15 Finance Act 1997 (FA97). Pursuant to section 11 FA97 gaming duty (GD) is charged on premises providing dutiable gaming. It is charged on the “gross gaming yield” which consists of the aggregate of gaming receipts (i.e. charges made in connection with dutiable gaming) and the banker’s profits (the difference between money or money’s worth staked with the banker less the value of prizes provided by the banker to those taking part in gaming).[44]Chapter 1 concerns general betting duty (GBD). GBD applies based on where the customer is located, not where the bookmaker is based. It is charged at a set percentage of the bookmaker’s profits from general bets. Profits are calculated as the total amount staked by customers, minus the amount paid out in winnings. When calculating the total amount staked, where the person who makes the bet does so pursuant to an offer which permits the person to pay nothing or less than the amount which the person would have been required to pay without the offer, the amount which would otherwise have been staked is liable to be included in the profits calculation.[45]Chapter 2 similarly provides for pool betting duty i.e. betting where all the stakes are pooled together and the winnings are shared among the winners, rather than being paid at fixed odds.[46]Chapter 3 concerns RGD and we shall turn to consider the detail of this chapter shortly.[47]Chapter 4 provides for the administration of GBD, pool betting duty and RGD including the requirement for providers to register, accounting periods, returns, payments, information, and records etc.[48]The structure of Chapter 3 is as follows:(1) Section 154 defines remote gaming.(2) Section 155 prescribes that RGD is charged on the profits of a gaming provider on the participation in remote gaming by a person (natural or legal) in the UK. The profits so chargeable are the aggregate of the profits on pooled prize gaming, ordinary gaming and retained prizes (defined and calculated in accordance with sections 156, 157 and 158 respectively).(3) The basis of calculation under each of sections 156 – 8 is broadly to aggregate the amounts received/to which the gaming provider becomes entitled and deduct where relevant, the aggregate value of prizes (and other permitted adjustments). Section 157 specifies that profits from ordinary gaming are the difference between “the aggregate of the gaming payments made to the provider in the accounting period in respect of ordinary gaming” and “the amount of the provider’s expenditure for the period on prizes in respect of such gaming”.(4) In summary section 159 provides the basis of determining what a gaming payment is, when it is deemed to be received and its value. Section 159A excludes, through two routes, certain sums from the scope of section 159.(5) What constitutes a prize/the amount expended in connection with prizes for the purpose of the profits calculation are set out in section 160 with section 160A specifically providing for the exclusion of certain prizes from the profits calculation.(6) Section 161 provides for certain exclusions and section 162 imposes the liability to pay RGD on the gaming provider.[49]As is apparent from the summary provided, Chapter 3 is part of a legislative infrastructure whereby betting, gambling, and gaming activity undertaken by those in the UK will be subject to tax. The duty is charged in each case on the profits of the gaming provider as defined.[50]The parties agree that the MR Spin is a game of chance in which UK persons participate by way of the internet. As such it is remote, ordinary, gaming meeting the definition provided for in section 154.

Waiver Part

[51]Having set that context we move to interpret section 159(4) in the context of an MR Spin.

Parties submissions

[52]The Appellant contends that participation in the MR Spin was pursuant to an offer that the gaming payment be waived. They rely on the fact that Mega Reel is not exclusively offered on a free basis and that the reel displays a spin value which is a necessary part of the configuration of the game offered. They point to the fact that the spin value is credited to the Customer’s gaming account prior to participation and then debited when participation begins representing payment for participation but at no cost to the Customer.[53]HMRC contend that as the MR Spin does not require a payment there is no payment capable of waiver and therefore there can be no offer or waiver, it cannot therefore meet the terms of section 159(4). They consider that the existence of a notional spin value and the recording of the transaction are irrelevant. They submit that the existence of a pay for version of the game is simply a different game.

Discussion

[54]We begin by considering subsection 159(1) which, relevantly provides:
“where a chargeable person participates in remote gaming the “gaming payment” … is the aggregate of (a) any amount that entitles the person to participate in the gaming and (b) any other amount payable for or on account of or in connection with the person's participation in the gaming”
[55]None of the words used in that subsection is a defined term (rather, they are the ordinary words Parliament has chosen to determine what constitutes a “gaming payment”). That provision requires there to be a requirement to make a payment in order to participate in remote gaming. If no amount is required to be paid directly or indirectly in connection with participation, there is no gaming payment. As such a game for which participation is free for all will not, in our view, give rise to a gaming payment and will not therefore be within the scope of RGD.[56]Subsection 4 expands what is included as a gaming payment when aggregated for the purposes of the profits calculation in circumstances “where the chargeable person participates in remote gaming in reliance on an offer which waives all of the gaming payment”, in that case “the person is to be treated as having made a gaming payment of the amount which would have been required to be paid without the offer.” In our view, this provision establishes a clear difference between the provision of a free game (i.e. one in which anyone is entitled to participate without payment) and being permitted to play a game for free (i.e. the participant is relieved of a pre-existing obligation to pay). In the latter case, the payment otherwise required is specifically scoped into the definition of a gaming payment and thereby included in the gaming profit calculation. In the former, participation is not subject to RGD because no amount is otherwise due as a gaming payment. Whilst gaming which requires no one to pay a wager or place a stake but provides an opportunity to win meets the definition of gaming (as provided in section 6 Gambling Act 2005) the participant does not risk and can never be asked to pay anything to participate and, as such, there is nothing to waive and thereby nothing to treat as a gaming payment.[57]We consider the language to be clear and unambiguous in this regard and it certainly does not result in an absurdity. There is therefore no need to use any external aid to interpretation. However, we note that our conclusion is consistent with the terms of the Explanatory Notes when section 159(1) was first enacted in 2014 and when subsection (4) was enacted in 2017. These notes relevantly provide: Explanatory notes to FA14: … Part 3 – Chapter 3 “Section 159 provides that any amounts that are paid in connection with, or that will entitle a UK person to participate in, remote gaming will be treated as a “gaming payment”.” Explanatory notes to FA17, Clause 67:
“1. This clause amends the remote gaming duty (RGD) provisions in Part 3 of the Finance Act 2014 … to make certain freeplays chargeable with duty. … 4. [section 159(4)] imposes a value for duty purposes on any offer that waives the normal payment to participate in remote gaming. Where someone makes use of such an offer they will be deemed to have paid the full amount that would have been required without the offer.”
[58]We are reassured that paragraph 1 indicates that some freeplays were not intended to be subject to RGD confirming our view that participation in free gaming is not subject to RGD. Paragraph 4 explains that where a payment would be required but for the waiver (i.e. a normal payment) there is a deemed gaming payment.[59]We then turn to analyse the arrangements between the Appellant and the Customer. On the basis of the facts as we have found them, it is apparent that in respect of an MR Spin the offer is for participation in a free game and not participation in a game for free. This is on the basis that:(1) The terms and conditions generally provide that promotional offers are made through use of the Mega Reel.(2) The terms of such promotional offers vary. However, the Welcome offer is made on the basis that the Customer receives “a free spin of the Mega Reel”. There is no indication on the offer for the Customer to participate in the Welcome offer Mega Reel that it is anything other than a free game. And for that customer pursuant to that offer it is a free game.(3) The pop-up box through which the Welcome offer is transacted bears no indication that there is a requirement to pay an amount to participate which will be waived. We do not consider the spin value shown on the reel an amount required to participate because it is not, it is an entirely notional sum which the Appellant does not require to be paid and which is accordingly not waived when, by accepting the Welcome offer, the Customer is forming a contract to play a free game. As such, we do not consider that even were the Customer to notice the spin value, they would consider that their entitlement to participate was on the basis of an offer to waive a payment otherwise required.(4) The back-office accounting which is undertaken whereby the spin value is credited to the Customer to be immediately debited again does not, in our view, represent a gaming payment. The credit and debit are invisible to the Customer. Further, the recording of the MR Spin differs from the way in which Free Spins are recorded. If there is synonymity between a Free Spin (participation in which both parties accept is pursuant to an offer to waive the gaming payment) we cannot understand why there would be this difference. In our view, the commercial reality is that the Appellant was forced to generate a debit and credit reflecting the spin value in order to substantiate its contention that there was an offer to waive the gaming payment. It not therefore evidence of the offer.(5) We do not consider the fact that the Mega Reel is the vehicle through which other promotions (by invitation) may be offered which involve a requirement to pay affects our conclusion (however frequently it may be so offered). When the Mega Reel is used in that way it is a separate game with different participation terms and conditions. Where those terms and conditions require a payment there is an amount required to participate and there is a gaming payment pursuant to section 159(1). Where participation is pursuant to an offer that waives the amount required to be paid there will be a deemed gaming payment pursuant to section 159(4). However, where the offer is to play a free game there is no gaming payment actual or deemed.[60]We have considered whether the requirement that the Customer must deposit a minimum of £10 could be taxed as a gaming payment. Whilst we consider this to be the reciprocal performance necessary to create the contract for the Welcome offer MR Spin, we do not consider that the act of depositing £10 is capable of constituting “an amount” or “any amount” payable. Certainly, we do not consider that the £10 is such an amount as, at that stage, it is only deposited into the Customer’s account with the Appellant, it is not the payment made to participate.[61]We therefore conclude that there is no amount to be included in the gaming profits calculation as a gaming payment in respect of the Customer’s participation in the MR Spin. The consequence of that conclusion is that the Appellant over-accounted for RGD on the spin value of MR Spins.

Excluded part

[62]This part of the Liability Issue centres on the mechanics of section 159A. Parties submissions Appellant’s submissions

Parties submissions

[63]By its skeleton argument the Appellant contended that the gaming payment which had been waived in respect of Free Spins was excluded from being treated as a gaming payment for the purposes of section 159(4) by virtue of section 159A either by way of operation of the conditions of section 159A(1) – (3) or (4) – (5).[64]On section 159A(1) – (3) it was contended “excluded winnings” are not limited to situations in which a gaming payment has been waived as the conditions prescribed in subsection (2)(a) and (b) are in the alternative. The Appellant accepted that the terms of (2)(a) were not met (on the basis that they lose the Waiver part). However, it was claimed, without substantive reasoning, that the provisions of (2)(b) were met, if interpreted through the lens of the explanatory note which focused on identifying how participation in the Free Spins was funded. As participation in the Free Spin was facilitated through winnings from the MR Spin and Free Spins, by their nature, had to be used for the purposes of further participation it met the terms of (2)(b)/(3).[65]In the alternative, it was contended that the terms of 159A(4) and (5) were met again, as interpreted through the lens of the explanatory note. Even less was said to elucidate this argument in the skeleton argument. In oral submissions, Mr De Haan contended that it was uncontentious that the Free Spin met the terms of subparagraph 4(a) and that a Free Spin, by its very nature was won in circumstances in which there was no choice of an alternative benefit, it was a case of play or don’t and that was not a relevant choice. As there was no restriction in the language of the first sentence of section 159A(4)(b) that the Free Spin had to have been won in a particular game, or through an offer in which the gaming payment was waived, it was plain that the Free Spin had been won through participation in remote gaming i.e. the MR Spin. Mr De Haan emphasised that where the draftsperson had wanted to be specific in their reference to a particular form or nature of gaming, they had been so specific by way of example he referred to section 159(5).[66]To support that the Free Spins were excluded under one or both of section 159A(1) – (3) or (4) – (5) it was contended that the consultation and responses to that consultation demonstrated that the overarching intention of the 2017 amendments were to bring within the scope of RGD only promotional free gaming. All subsequent free gaming was to be excluded and that should actively inform the interpretation to be put on the provisions.[67]Further support was said to be derived from an example of disproportionate taxation arising from an assumed situation where the Customer only ever deposits £10. Where that Customer then wins 500 Free Spins on the MR Spin, RGD would end up being paid on the 500 Free Spins which, if the stake on the relevant game were 10p, would result in more RGD having been paid than the total deposit taken from that Customer.

HMRC’s submissions

[68]HMRC contend that none of the provisions of section 159A are apposite to exclude the waived payment on Free Spins from being treated as gaming payments because the section is drafted to exclude only free gaming consequent upon a win from free gaming. Mr Donmall submits that this is the natural and plain interpretation of the language, particularly in the context of the heading to the section. Subsections 159A(1) – (3) relate to participation using an amount of money which has been won, and which cannot be withdrawn such that it can only be used for further participation in gaming (bonus cash). The two conditions effectively exclude the second and all subsequent play following participation by way of an offer which waived the gaming payment. Subsections (4) and (5) are not excluded winnings because they relate to further free participation by waiver of the gaming payment where that subsequent participation was won directly from participation through an offer where the gaming payment was waived.[69]Particular emphasis is put on the heading to section 159A which Mr Donmall contends imports the definition of freeplay as provided in section 160A(3) i.e. participation in remote gaming, in reliance on a freeplay offer which is itself defined as an offer which waives all or part of the gaming payment. HMRC submit that there is a clear intention that the concept of an offer to waive the gaming payment when participating in a particular game is freeplay. The first act of freeplay is entered into the RGD profits calculation with play won or funded from winnings from that freeplay being then excluded.[70]HMRC also point out that if we conclude, as we have, that the Customer’s participation in the MR Spin was not as a result of an offer waiving the gaming payment, the payment subsequently waived when the Free Play is used must fall within the scope of a gaming payment, otherwise RGD will be due on neither the MR Spin nor the Free Spin in the context of legislation clearly intended on its terms to bring within the charge to duty the first instance of free play and that would be an absurd result.

Discussion

[71]The Appellant has not included within its gaming profit calculation as a gaming payment any amount associated with a Free Spin. We now have to determine whether it should have done so. In this regard we are required to interpret section 159A FA14.[72]To the extent that the Appellant really pursued the argument that participation in the Free Spin met the requirements of section 159A(1), (2)(b) and (3) we reject it. In our view those provisions plainly require that the gaming payment be made using money/money’s worth the use of which is restricted to further participation in gaming but where the money has been won in reliance on an offer which waives all or part of a gaming payment. The distinction between (2)(a) and (b) being whether the gaming payment for the second or subsequent act of participation is met from winnings (bonus cash) directly from the offer to participate when the gaming payment is waived or down the line from subsequent bonus cash winnings which has been re-wagered. Thus, once it is determined that participation in the MR Spin was not pursuant to an offer to waive the gaming payment the Free Spins won are not derived from participation pursuant to such an offer either directly or through re-wagering.[73]We do not consider that there is an iota of ambiguity in that interpretation, and we do not therefore need to consider the terms of the explanatory note. However, the Appellant contended that its interpretation was supported by its terms. Concerning subsections (1) – (3) the note states: “8. Subsection (3) introduces a new section … to deal with play using the winnings from successful freeplay. 9. The new subsection (1) provides that an amount is not to be treated as a “gaming payment” under section 159 if it meets both the conditions to qualify as “excluded winnings” as defined in subsections (2) and (3). 10. The new subsection (2) requires that the money has been won from participation in gaming by means of a freeplay or, that it has been won from participation in gaming by means of a payment from money that can only be used for participating in gaming. 11. The new subsection (3) … requires that an amount can only qualify as “excluded winnings” if it is money that can only be used for participating in gaming.[74]We can see that the terms of paragraphs 10 and 11 create an ambiguity in the interpretation we have adopted. However, we do not consider that the terms of the note accurately reflect the language of the provision; they ignore the requirement that the payment must be paid out of money in relation to which “this condition” and the second condition apply. In our view if rather than saying “requires that the money has been won from participation in gaming by means of a freeplay or, that it has been won from participation in gaming by means of a payment from money that can only be used for participating in gaming” it had said “requires that the money has been won from participation in gaming by means of a freeplay and, where it has been won from participation in gaming by means of a payment from money that can only be used for participating in gaming” it would more properly have reflected subsection (2).[75]As set out in paragraph 40 an explanatory note cannot be elevated to supplant or alter the meaning of the language used. It can only cast light on the purpose of the legislation and be used to resolve ambiguity in the meaning of the actual words used.[76]In addition, the Appellant contends that despite there being no charge to RGD on the MR Spin the Free Spin nevertheless meets the terms of subsections 159A(4) and (5). So far as relevant subsection (5) deems a payment which would be treated as a gaming payment under section 159(4)(a) as not so treated where the provisions of section 159A(4) are met.[77]Given the importance of this we repeat the terms of section 159A(4):
“(4) Subsection (5) applies where— (a) a chargeable person participates in remote gaming in reliance on an offer which waives all or part of a gaming payment, and (b) that offer has been won in the course of the person's participation in the gaming (and the person was not given the choice of receiving a different benefit instead of the offer).”
[78]There is no dispute between the parties, and we agree, that as regards a Free Spin the Customer participates in remote gaming in reliance on an offer which waives all of the gaming payment. Without having the benefit of having won the Free Spin on the MR Spin the Customer would have to pay the normal wager/stake for participation in the named games all of which are generally available on the Appellant’s platforms and require that a gaming payment be paid in order to participate.[79]The real issue concerns the interpretation of the first part of section 159A(4)(b) as the parties also accept that the part in parentheses is met as the Customer is offered no alternative benefit for the Free Spin. They can take or leave the Free Spin, but they cannot have anything else in its stead.[80]As with section 159 none of the words used in this subsection are defined. We have no difficulty in interpreting “that offer” to mean the Free Spin. We must therefore decide whether the Free Spin was “won in the course of participation in the gaming”.[81]We have decided that there was no gaming payment within the terms of the statute in connection with the MR Spin but there can be no real question that the Customer participated in the Mega Reel (which HMRC accept was a game of chance and hence gaming) using the internet and was thus remote gaming. It is simply that it was not remote gaming within the scope of the charge to duty. Whether that is enough to meet the terms of section 159A(4) therefore depends on the meaning of “the gaming”.[82]We accept that the drafting of Chapter 3 provides some situations in which the nature of the gaming referenced is explicit (section 159(5) refers to “the remote gaming” in the context of the deemed time at which the gaming payment is treated as having been received). However, that is not universally the position, the term “the gaming” is used in Chapter 3 in the following places: (1) Section 154(2) in the context of the definition of “pooled prize gaming”:
“if all or any part of the gaming payment is assigned by or on behalf of the gaming provider to a fund … from which prizes are to be provided to participants in the gaming”. (2) Section 159(1) defining “gaming payment”: “where a chargeable person participates in remote gaming the ‘gaming payment’ for the purposes of this Chapter is the aggregate of (a) any amount that entitles the person to participate in the gaming and (b) any other amount payable for or on behalf of or in connection with the person’s participation in the gaming.” (3) Section 159A(1) – (3) concerning excluded winnings: “(1) Where a chargeable person participates in remote gaming, an amount is not to be taken into account in determining the “gaming payment” (if any) under section 159 so far as the amount is paid out of money in relation to which the first and second conditions are met (“excluded winnings”). (2) The first condition is that the money has been won by participation in the gaming either - (a) in reliance on an offer which waives all or part of a gaming payment, or (b) in a case where the gaming payment was paid out of money in relation to which this condition and the second condition were met. (3) The second condition is that the chargeable person is not entitled to use the money otherwise than for the purpose of participation in the gaming.” (4) Section 161(1): “remote gaming duty is not charged on participation by a chargeable person in remote gaming if (a) the arrangements between the chargeable person and the gaming provider are not entered into in or from the United Kingdom, and (b) the facilities used to participate in the gaming are not capable of being used in or from the United Kingdom.” (5) Section 162(3): “Remote gaming duty which is charged on the gaming provider's profits on remote gaming for an accounting period may be recovered from the holder of a remote operating licence for the business in the course of which the gaming took place as if the holder of the licence and the provider were jointly and severally liable to pay the duty.”
[83]In each of the cases where “the gaming” is used we tend to the view that it is referring to gaming of the nature identified immediately before the use of the words “the gaming”. In sections 159(1), 159A(1) – (3), 161(1) and 162(3) that is a reference to remote gaming generally. In section 154(2) however, it is plainly a reference to “pooled prize gaming”. In section 159A(4) we consider it is a reference to gaming in which the chargeable person participated pursuant to an offer which waived the gaming payment i.e. the gaming referred to in section 159A(4)(a).[84]We accept that this interpretation is not without some ambiguity, and we therefore consider it appropriate to have regard to the external aids available to us.[85]We start with the explanatory note to FA17. We have already set out paragraphs 8 – 11. So far as relevant the remainder of the note states :
“12. The new subsections (4) and (5) combined provide that where a person participates in gaming by means of a freeplay, and that freeplay has itself been won from gaming in which no alternative benefit was offered, the use of that freeplay will not be treated as a gaming payment under section 159. … 15. Subsection (4) amends subsection 160 … to limit the definition of a prize in that section so that where winnings are credited to a person’s account, only winnings in the form of money that can be withdrawn on demand can be treated as a prize. Section 160 is further amended so that it is to have effect subject to the provisions of section 160A. 16. Subsection (5) inserts a new section, section 160A … that makes provision about prizes in the form of a freeplay. 17. The new subsection (1) of that new section provided that where a freeplay is given as a prize by the gaming provider, and thas not been obtained from an unconnected person, that freeplay will have a nil value as a prize for the purpose of calculating a gaming provider’s RGD profits. … 19. The new subsection (3) provides a definition of “freeplay” and “freeplay offer” for the purpose of the new section 160A.”
[86]We consider that these notes, taken with those set out in paragraph 73 above, provide some elucidation to the Parliamentary objective for the amendments. From them we discern that the scheme of the amendments was to bring into the charge to RGD the first instance of participation pursuant to an offer that the gaming payment be waived but to exclude participation through re-wagering of money won through having played for free and/or through prizes themselves allowing for further waiver of gaming payments (i.e. spin again on the same game or free spins on other games). The quid pro quo for excluding these amounts was that only monetary prizes capable of withdrawal by the participants would be deductible from aggregated gaming payments for the purpose of calculating gaming profits, and not bonus cash subject to the re-wagering requirement. Thus, to the extent that an initial offer of waiver perpetuates further participation, that further participation is to be equated with playing a free game and not playing for free. We find no support in the terms of the explanatory note for a conclusion that only promotional free play was to be taxed and, for the reasons already stated, we do not consider we are entitled to consider the terms of the consultation, the responses to it or HMRC’s explanation of how the provisions were intended to operate.[87]However, even were we to have considered that only promotional free play was to be taxed we consider that there is nothing to preclude a conclusion that the MR Spin determined the extent of promotional free gaming to be given to each customer. Addressing the Appellant’s submission that to tax all Free Spins won on the Mega Reel might result in more taxation than had been received in deposits we see that situation as no different to a promotional loss leader. The Appellant presumably chooses to offer 500 Free Spins as a prize because overall it is beneficial to its business by doing so. If the Welcome offer was scoped with such a prize on the basis that there was no tax cost that does not make the taxation of the Free Spins an absurdity simply a consequence of not having correctly determined the tax consequences of the promotional offer made.[88]The perspective we derive from the explanatory note confirms our conclusion that an interpretation which permits a win from participation outside the scope of RGD to then be perpetually untaxed is contrary to the parliamentary intent. In equal measure it supports an interpretation that “the gaming” in section 159A(4) is a reference to participation “in remote gaming in reliance on an offer which waives all or part of the gaming payment” confirming it as the better view.[89]The second external aid we consider to be admissible is the heading to section 159A. The heading states that the section concerns “Play using the results of successful freeplay”. We reject HMRC’s submission that the heading is itself to be interpreted by reference to the definition of “freeplay” provided in section 160A(3). We do so principally because Parliament expressly chose to limit the definition provided in section 160A(3) as applying “in this section”. Secondly, to do so is to seek to interpret the statutory aid, contrary to the case law summarised in paragraph 40 above. That said, we do consider that the heading’s use of the word “freeplay” is entirely consistent with and supportive of the interpretation we have applied with “the gaming” looking back to the participation provided for free by way of waiver of the gaming payment.[90]We are therefore satisfied that whilst participation in the Free Spins won on an MR Spin is participation pursuant to an offer in which the gaming payment is waived that participation was not itself won in the course of participation in gaming reliant on an offer which waives the gaming payment. As a consequence, section 159(4)(a) applies requiring the gaming payment waived on the Free Spin to be included in the gaming profits calculation. It is not excluded by section 159A. Validity issue

Parties’ submissions

[91]The Appellant contends that having expressly conceded that Assessment 3 was not issued to best judgment the effect of the letter dated 21 May 2024 must have been to withdraw and reissue the Assessment. On the basis that the time limits for making an assessment expire on the earlier of 1 year of evidence of fact or 4 years after the end of the period to which the assessment relates the reissued Assessment is made out of time and therefore invalid.[92]HMRC contend that Assessment 3 was issued to the best judgment in the sense articulated in case law as recently reviewed by the Upper Tribunal in Sintra Global Inc v HMRC [2024] UKUT 00346 (TCC). Mr Mack used the information that was available to him at the time to calculate in a reasonable way the amount of RGD on the participation through use of Free Spins awarded following an MR Spin. His accepted evidence was that he had limited information concerning the number of Free Spins awarded. As the Appellant accepts, there was nothing capricious or vindictive about Mr Mack’s decision to assess or the basis on which Assessment 3 was calculated. However, when further information was provided, and the calculations were revisited, it was accepted that Assessment 3 needed to be recalculated. The letter of 21 May 2024 states that it is a recalculation. There is no indication that Assessment 3 was withdrawn and reissued. There is therefore no question that Assessment 3 is made out of time.

Discussion

[93]We gave a summary, ex tempore decision on this issue informing the Appellant that if their argument on the Liability Issue were to fail their appeal in this regard was also refused.[94]What is required for a best judgment assessment has been repeatedly stated. HMRC are required to exercise their assessment powers by fairly considering all the material placed before them and, on that material, reach a decision which is reasonable and not arbitrary in amount. Errors identified in an assessment which represent an honest and genuine attempt to make a reasoned assessment of the tax/duty payable do not vitiate the assessment as contrary to best judgment.[95]The line of case law from HMCE v Pegasus Birds Ltd [2004] EWCA Civ 1015 confirms that when faced with a challenge to a best judgment assessment the principal issue for the Tribunal to determine is the correct amount of tax due on the evidence before it and by reference to the burden of proof which rests on the Appellant. An assessment should only be set aside where justice requires it because justice cannot be served by reducing the assessment to the amount the Tribunal finds to be a fair figure. That will be a rare situation and will usually arise only where there is a lack of bona fides on HMRC’s part. As such, the starting point for the Tribunal in any best judgment case will usually be to assess whether, on the evidence, tax is due from the Appellant. If it is, the Tribunal must roll its sleeves up and determine the amount the Appellant has demonstrated is reasonable or uphold HMRC’s assessment.[96]Strictly, that analysis does not apply here as the Appellant does not challenge that, when it was raised, Assessment 3 was made to best judgment in the sense set out above. It also accepts that if the Liability Issue is as contended for by HMRC (and as we have found) there is RGD properly due. Here, the Appellant contends we are faced with a situation in which, by the language used in the letter Mr Mack conceded the validity of Assessment 3 and purported to reissue it outside the statutory time limits.[97]In that sense therefore our task is simply to determine the legal effect of the letter dated 21 May 2024. Its relevant terms, as set out in paragraph 24 above are worth repeating:
“HMRC have reviewed the assessment to excise duty … notified to you on 30 March 2023 now [sic] reduce the total of those assessments as follows: … These have been reduced as upon review of the case so far, the figures had not been calculated to best judgment based on the figures available.”
[98]As we stated in the hearing, we are sure that Mr Mack is unlikely ever use that same construction of language again. But despite the statement that “the figures had not been calculated to best judgment” we consider that the terms of the letter of 21 May 2024 plainly “reduce” Assessment 3 rather than withdraw it or concede that Assessment 3 was invalid. We do not consider there is any construction of the letter which would justify a conclusion that Assessment 3 had been withdrawn and reissued. On that basis, the proper concession made by the Appellant that Assessment 3 was made to best judgment means that Assessment 3 is valid.[99]As HMRC acknowledge (see paragraph 25 above) the Assessments require to be reduced to allow for the overpayment of RGD accounted for by the Appellant on MR Spins the parties are content to agree the amendment without the further involvement of the Tribunal.

Decision

[100]For the reasons set out above the Assessments are upheld save to the extent that they now need to be reduced in light of the information provided by the Appellant on the RGD accounted for on MR Spins.

Right to apply for permission to appeal

[101]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. Release date: 16th SEPTEMBER 2025