Welcome Refund for Rank PLC
November 10, 2008 (InfoPowa News) — The British online and land gambling group Rank plc received a welcome financial boost totalling £59.1 million this week, courtesy of Her Majesty's Revenue and Customs. The refund was in respect of overpaid VAT over a period of five-and-a-half years between January 2003 and June 2008, and has been returned to Rank following a VAT and Duties Tribunal ruling made in May this year, which Her Majesty's Revenue and Customs has appealed.
Rank anticipates the net cash benefit to be partially offset by gross profits tax and other related costs. The company said that the HMRC appeal would be heard by the High Court in the first half of 2009. If Her Majesty's Revenue and Customs is successful in its appeal, Rank may be required to return the payment with interest.
The case concerns the application of VAT on games of interval bingo in Rank's Mecca Bingo clubs. As a consequence of the Tribunal's ruling, Mecca Bingo has not paid VAT on any games of interval bingo since July 2008.
Rank Group does not at present intend to recognize the revenue or operating profit benefits of the repayment in the group accounts for 2008. The repayment will be used to reduce the group's net debt and will have no impact on the size of Rank's existing banking facilities, which will remain committed until 2012, said a company spokesman.
The Tribunal's ruling is expected to result in an annualised cash benefit to Rank of around £6 million.