Aspinalls Club Ltd v Revenue & Customs

For gaming duty, the value in money or money’s worth of chips staked is their face value. A commission payable under a separate incentive agreement does not reduce the value put at risk in the game.

The substitution of “prizes provided” for “winnings paid” in section 11(10)(b) of the Finance Act 1997 did not bring commissions or loss rebates within deductible prizes. Parliament expressly treated account credits as prizes for remote gaming but enacted no equivalent provision for gaming on premises. A substantial extension of deductible prizes could not be inferred from the change in terminology or an explanatory note.

Aspinalls Club Ltd offered selected customers commissions based on chips staked and rebates based on losses, subject to turnover requirements. It sought to deduct those payments when calculating its banker’s profits for gaming duty under section 11 of the Finance Act 1997.

HM Revenue and Customs rejected the deductions. The First-tier Tribunal dismissed Aspinalls’ appeal in [2011] UKFTT 325 (TC), and the Upper Tribunal dismissed its further appeal in [2012] UKUT 242 (TCC).

The Court of Appeal had to decide whether commissions reduced the value of stakes under section 11(10)(a), or whether commissions and rebates were prizes provided under section 11(10)(b).

1. Appeal dismissed. The value in money or money’s worth of stakes staked under section 11(10)(a) of the Finance Act 1997 was the face value of the chips. Staking a chip was equivalent to staking money. The value put at risk in the game was not reduced by a commission payable under a separate Cash Chip Agreement. CHT Limited v Ward [1965] 2 QB 63 and Lipkin Gorman v Karpnale Limited [1992] 2 AC 548 (HL) were applied.
2. The statutory definition of banker’s profits was unambiguous. Although the expression selected for definition may illuminate an ambiguous definition, it could not alter clear statutory language. The reference to profits therefore did not authorise the deduction of the costs incurred in earning them or require calculation by reference to an asserted underlying economic reality.
3. The commissions and loss rebates were not prizes provided within section 11(10)(b). The substitution of “prizes provided” for “winnings paid” by the Finance Act 2007 did not extend deductible prizes to those incentive payments.
4. The statutory contrast with remote gaming was decisive. The same 2007 legislation expressly treated certain credits and the return of a stake as prizes for remote gaming under section 26F of the Betting and Gaming Duties Act 1981, but enacted no equivalent provisions for gaming duty on premises. Had Parliament intended commissions or rebates to count as prizes under the 1997 Act, it would have said so expressly.
5. The court was required to construe the statute rather than the explanatory note. A substantial amendment could not be introduced by an opaque change in terminology, particularly when Parliament had used express language for comparable credits elsewhere. Black and Gloster LJJ agreed with Moses LJ.

1. Court of Appeal (Civil Division): In [2013] EWCA Civ 1464, unanimously dismissed the appeal from the Upper Tribunal.
2. Upper Tribunal (Tax and Chancery Chamber): Briggs J dismissed Aspinalls’ appeal in [2012] UKUT 242 (TCC).
3. First-tier Tribunal: Dismissed Aspinalls’ appeal in [2011] UKFTT 325 (TC).