Rank insures against unfavourable tax verdict

27th Sep 2010 07:38

Casino and bingo hall operator Rank Group is paying £4.5m to cap its tax liabilities in case the tax man wins his appeal against the company.The agreement with a third party relates to £59.1m of value added tax (VAT) refunded to Rank by Her Majesty's Revenue & Customs (HMRC) in 2008 as a result of the group's successful claim that the tax had been wrongly applied to games of interval bingo.HMRC is appealing against that decision to the European Court of Justice (ECJ). A final decision is expected by the end of 2012.The £4.5m Rank is paying to the third party will be recorded as an exceptional item in this year's accounts.In the event that the ECJ finds in favour of HMRC, Rank's net liabilities would total £25.6m plus interest as a result of the cap agreement rather than £66.1m plus interest if the agreement was not in place.The agreement does not cover a further £42.5m plus interest of VAT refunds relating to overpaid VAT on games of main stage bingo and amusement machines; nor does it cover a contingent tax asset of up to £35m related to a claim made under the Condé Nast/Fleming ruling.