Last plea made to Chloe Smith on new gaming tax

Amusement industry association BACTA has made a last plea to the new Treasury minister and Norwich MP Chloe Smith not to threaten their industry with the new Machine Gaming Duty (MGD).

Proposals to introduce MGD were outlined by the government in May 2011 and would replace the current system whereby arcades pay an annual tax (AMLD) for each machine owned, as well as VAT. MGD would replace both of these with a flat annual percentage of takings.

A recent report by accountant Ernst and Young on the issue and quoted by BACTA warned that the current Treasury plans to introduce MGD have not taken into consideration the overall impact of partial VAT exemption and the existing business model of struggling seaside family amusement centres.

But a Treasury Spokesperson said MGD would make the taxing of machine games fairer and more sustainable because the tax would be directly linked to gross profits.

'While we accept there will be both winners and losers, we believe that, on balance, the change will help operators with less profitable machines and low VAT recovery rates. Also, many family seaside amusement arcades will benefit from the government's intention to have a lower rate of MGD for machines with low stakes and prizes.'

Representatives from the industry met Ms Smith last week to discuss the plans and make their case.

Ms Smith said she was happy to hear the business views but could not comment fully because of the consultation.

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Ian Lines is managing director of Triangle Amusements Ltd and runs arcades in Great Yarmouth, Cromer and Hunstanton and is a member of BACTA.

He said although they had not calculated the full impact of the plans but he believed it would have a 'detrimental' impact on the business at a tough time for the industry.

'It is certainly tough. People are holding on to their money. We are a long way down the food chain. We've had quite a lot put up against us including the lottery. We hope they listen to what they are advised by people in the industry rather than just ploughing ahead with it anyway.'

BACTA president Derik Petrie said: 'The Minister clearly had a grasp of the issues our industry is facing, not least the years of cumbersome regulation that amusement arcades have had to contend with. The proposal to introduce Machine Gaming Duty has to be treated with the utmost delicacy. Calculations by Ernst & Young have proven that many arcade owners could face an extra tax bill of �400,000 if the proposals are not properly thought through. It is critical that Treasury find a way of allowing irrecoverable VAT to be offset against MGD and that the rates take into consideration the commercial viability of low stake and prize amusements. If these two issues are not resolved, the announcement on the 6th December will be a fatal blow for any small business, but especially so to our industry which has suffered from crippling regulation in recent times.

'We've been reassured that there is not a desire to see further arcades shut down, nor to see more jobs lost in our industry, and are hopeful that the revised proposals will prove accurate in this regard. However, the proof really will be in the pudding and especially so in the details of any revised proposal. If the government gets this wrong, then we will see many more arcades boarded up alongside the 200 we've already lost over the past three years.'