VBANDG12200 - "Relevant machine games": accounting for VAT on "relevant machine game" takings: taxable takings calculation
The takings are regarded as VAT-inclusive so the business should apply the VAT fraction to the taxable takings. No other deductions should be made from the takings before the VAT fraction is applied. (This includes the theft of takings).
Where “relevant machine games” are played on a machine that also offers VAT exempt machine games and it is not reasonably practicable to attribute payments and winnings to “relevant machine games” or apportion them between “relevant machine games”, any attribution or apportionment is to be done on a just and reasonable basis.
Where “relevant machine games” are played and other activities are also available on the same machine, then attribution or apportionment of takings may be required depending on the liability of those activities.
Performing the taxable takings calculation for each individual machine presents no difficulties when a business has only one or two machines. Many businesses, however, operate sites that contain large numbers of machines. Whether the calculation may be performed upon a site-wide basis is a control question that involves balancing what is fair and practicable for the business against maintaining adequate control over risks to the revenue. Provided that you are satisfied control is adequate, a site-wide basis of accounting for takings is acceptable.
Guidance on the treatment of replayable tokens can be found in VBANDG13000.