Machine Games Duty (MGD) has replaced Amusement Machine Licence Duty (AMLD), and where MGD is payable you don’t have to pay VAT on machine games.

A machine game is dutiable if both the following apply:

• the prize – or at least one of the prizes that can be won – is cash, or includes cash
• at least one of the cash prizes is bigger than the smallest amount that’s paid to play the game

There are two rates of duty for MGD:

• lower rate at 5 per cent – the lower rate is for machines where the maximum cost per game on that machine (the ‘maximum stake’) is 10 pence, and the cash prize is £8.00 or less
• standard rate at 20 per cent – the standard rate applies to any machine games subject to MGD, that aren’t covered by the lower rate

Registering for MGD

If you have dutiable machine games you’ll need to register for MGD with HMRC. You’ll need to do this at least 14 days before any machines are available to be played. This can be done online using the MGD Online Service, or by completing a form MGD1 which can be found at the following http://search2.hmrc.gov.uk/kb5/hmrc/forms/view.page?record=vDXRq_4kUMA&formId=7068 

Information you’ll need to hand before you register:

• the type of business you run
• the number of machines you have
• business address
• any correspondence address that is not the business address
• other references, for example National Insurance Number (NINO), Unique Trader Reference (UTR) or VAT Registration Number (VRN) where appropriate

Once HMRC has accepted and processed your online application, you’ll be placed on the MGD register and receive your MGD registration number. You will be able to view it online and a copy will be sent to you in the post. You can appoint Curle & Co as agent to deal with your MGD affairs. If you wish us to act as agent for your MGD affairs please inform us.

Calculating MGD

MGD is due on the total net takings from the playing of dutiable machine games. Net takings means what is charged to play the games less the amount paid out as winnings. You can treat as winnings (and deduct from MGD liability) the VAT inclusive cost of non-cash prizes given out for play on machines subject to MGD (that is machines which also offer a cash prize more than the cost to play the game). In this case, you must not deduct the value of non-cash prizes until they are actually given out to the winners.

Returns

Once you’re registered for MGD you must send HMRC regular returns and payments. The standard accounting period will be three calendar months. Your MGD return should be with HMRC 30 days after the end of the accounting period. It will need to give details of the net takings from dutiable machine games

Once you have signed up to use HMRC’s MGD Online Service you’ll be able to submit any subsequent returns online.  If you have not signed up to use HMRC’s MGD Online Service, you will need to submit a paper return (MGD 6). HMRC will issue a paper return after the end of each accounting period and this must be sent to HMRC by the 30th day following the end of the accounting period.

Payments

You’ll be able to pay MGD electronically by:

• Direct Debit – Variable Payment and Single Payment Plans
• Bacs Direct Credit
• Faster Payments by online or telephone banking
• CHAPS

You have a legal obligation to submit your MGD return and pay any MGD you owe to HMRC by the due date. If this date has passed and you haven’t submitted your return, HMRC will calculate what you owe using the best information available to them. This calculation is called an ‘assessment’. Therefore to ensure that you pay the correct amount at the correct time it is important that you submit your return by the due date.

Penalties

Penalties are applicable if:

• if you make a dutiable machine available for play and you don’t register for MGD
• if you don’t send in your MGD returns on time
• if you don’t pay the MGD that you owe
• if you make a mistake on your return