VAT decision sees Rank win £154m rebate from taxman

Rank has been repaid £74.8m in tax dating back to between 1973 and 1996 by HM Revenue & Customs following a long legal dispute. It is also due to receive a further £79.5m in interest later this month.

Rank, whose shares soared 14 per cent yesterday, had expected around £65m, plus interest, under the rebate.

“These repayments follow successive rulings in Rank’s favour in both the First-tier Tribunal’s tax chamber and the High Court,” Rank said in a statement.

The gaming group has already received £112.3m in payments from HMRC relating to separate claims after a series of court rulings.

But HMRC has lodged an appeal against the decisions, which will be heard this year by the European Court of Justice.

Rank said it expected that this appeal will be heard in 2011 and it would make the appropriate repayments if the appeal is successful.

“The claims concern the inconsistent application of VAT to bingo revenue generated by Rank’s businesses.

“It is Rank’s contention that this inconsistency contravened the European Union’s principle of fiscal neutrality,” Rank said.

Rank first began pursuing its tax claim in 2006 and put in a series of legal claims dating back to 1973 after it claimed its amusement machines had been taxed differently to other equivalent forms of gambling.

In 2010, the group beat forecasts with a 14 per cent rise in annual profit, driven by strength in its Grosvenor Casinos, and said positive momentum had continued into 2011 despite a difficult trading environment.

Rank said it made profit before tax and one-off items of £55.2m. The group, which plans to roll out 10 more casinos over northern and central England over the next few years, said customer numbers across all four of its businesses were up last year. The group scaled back its net debt from £186.8m to £124.4m over the year, ahead of a planned refinancing in the second half of 2011.