VAT: IFX Investment Company Ltd & Others – Court of Appeal judgment

VAT: IFX Investment Company Ltd & Others

The Court of Appeal has allowed the taxpayer’s appeal concluding that entry fees paid for entry to ‘Spot the Ball’ should have been exempt

Also on

Spot the Ball (STB) requires a person to estimate and mark the position of the ball on a photograph from which the ball has been removed. The winner is not decided based on the actual position of the ball in the photograph, but based on a decision by a panel about which entry is closest to the panel’s opinion of the most logical position of the ball. HMRC viewed the fees as taxable, on the grounds STB was not a game of chance. The VAT at stake is reportedly nearly £100million.The Court of Appeal has allowed the taxpayer’s appeal and restored the First-tier Tribunal’s decision that the fees paid by the players should have been exempt.

The Court of Appeal has decided that the First-tier Tribunal (FTT) was not wrong in law when it concluded STB was a game. The Upper Tribunal (UT) was instead wrong to decide that a game must require inter player participation / communication or some reaction to changed circumstances. There was no rule of law that required this. Indeed s52 (6) of the Gaming Act 1968 made it clear that game included a single player playing against the bank or playing on a gaming machine (though gaming machine takings were specifically excluded from the games of chance exemption at the relevant time) and this could be relied on in support of the FTT’s analysis.

Game is a vague concept and the FTT was justified in using its ordinary meaning which is wide and should be construed using context. Some degree of active participation is needed but this was present in STB (by virtue of the player marking the coupon and sending it in). STB was also a game of chance as the most that skill could do was to estimate the ball’s approximate position and whether the entry won a prize then became a question of luck.

The entry fee was therefore payment for the facility to play a game of chance and at the relevant time (23 April 1979 to 31 December 2006) the supplies were exempt. This was a unanimous decision by the Court of Appeal. To access the judgment click here.

For further information please contact :

Paul Stewart

Karen Killington

Tax Matters Digest

View KPMG's weekly newsletter covering the latest issues in taxation and government announcements relating to tax matters.

Read more

Connect with us


Request for proposal



KPMG’s new-look website

KPMG’s new-look website