Machine Games Duty (MGD) began on 1 February 2013. It replaced Amusement Machine Licence Duty (AMLD).
This guide tells you what MGD is, how it works and what you need to do if it affects you.
IMPORTANT: You must make an MGD return and pay on time. There are penalties for missing the deadlines.
The back of your MGD registration document lists the months in which each of your return periods ends (four a year) - each return period ends on the last day of the month. You need to make a return and pay what you owe by the last working day before 30 days after the end of each return period.
HMRC tries to help you to do this:
If you are an online MGD customer and provided we have your email address we will email you a reminder that your next return is due.
If you are a paper MGD customer we will send you a return through the post at the end of each period. If you think you should have received a paper return but have not done so you should ring the Excise & Customs Helpline straightaway.
On this page:
MGD has replaced AMLD, and where MGD is payable you don't have to pay VAT.
MGD is charged on the playing of dutiable machine games where customers pay to play the games in the hope they will win a cash prize that's more than the cost to play the machine. MGD is not payable on machine games that only offer non-cash prizes or only cash prizes that are less than the cost to play.
A machine game is dutiable if both the following apply:
MGD is not generally payable on the takings from machines where the play is:
There are two rates of duty for MGD:
If a machine offers several dutiable machine games, and one or more is subject to the standard rate, then all the dutiable machine games on that machine are subject to the standard rate. This applies whether or not some of them would otherwise be charged at the lower rate and regardless of whether anyone actually plays the standard rated games.
You'll need to register with HM Revenue & Customs (HMRC) for MGD and pay the duty if you hold the relevant licence or permit.
In Great Britain the relevant licences or permits are:
In Northern Ireland:
You'll also have to register if you represent someone who holds one of these licences or permits, for example if you are a personal representative or a trustee in bankruptcy.
If there is no licence or permit
If no one holds a relevant licence or permit for the premises then one of the following must register:
If no one registers, then all those listed above may be responsible for paying MGD.
If no one registers and HMRC are unable to establish who should be registered, then everyone who is entitled to a share in the profits from the machines may have to pay the duty on their share.
If the dutiable machine games are on a stall at a travelling fair then either the stallholder or the person in charge of the fair must register for and pay MGD. If neither of them registers then both may be responsible for paying MGD due.
If you have dutiable machine games you'll need to register for MGD with HMRC. You'll need to do this at least 14 days before any machines are available to be played.
You can register for MGD online.
There may be times when HMRC will ask for security for payment of duty before they'll accept your application to register. If you're located outside of the UK, HMRC might not accept your registration unless you have a tax representative in the UK.
HMRC can issue a registration notice when they have evidence to suggest there is failure to register for MGD. If you don't agree with this, you can ask HMRC to reconsider their decision. You have the right to appeal within 30 days of the registration notice. If you can't prove to HMRC that you don't need to register, or you don't appeal within the time limit, HMRC can register you from the date of the registration notice.
Two or more corporate bodies (that is companies or partnerships incorporated through Companies House), can ask to be registered as a group. This is usually allowed so long as all the proposed members:
One group member needs to take on the role of group representative. The group representative will be expected to make returns and submit payment on behalf of the group.
All members of the group will be 'jointly and severally liable' for MGD payable to HMRC. This means that HMRC can ask any one member of the group to pay MGD due, although HMRC are only likely to do this if the group representative doesn't pay.
You can register online using HMRC's MGD Online Registration Service.
The online system is:
Information you'll need to hand before you register:
If you don't have a licence or permit, HMRC will need details of all the premises that you want to register for.
Once HMRC has accepted and processed your application, you'll be placed on the MGD register and receive your MGD registration number. You'll be able to view it online and a copy will be sent to you in the post.
If you prefer not to use an online system, you can download the registration form from the HMRC website and send it to HMRC by post.
You must tell HMRC if there are changes to what you told us about your business when you registered. For example, you’ll need to tell us about any change of address or if you stop providing machine games for play.
You can go to the MGD online service and amend your registration details or write to HMRC.
You can appoint an agent to deal with your MGD affairs. The MGD for agents service enables agents to:
HMRC will not discuss your personal or financial information with an agent if they haven't been authorised.
For more information about agents go to Tax agents and advisers
When your registration application is accepted, HMRC will add your name to the MGD Register. The register is publically available - people wanting information about who is registered for MGD can put in a postcode and find all the registered addresses at that postcode. This means that anyone who has concerns about MGD liability if no one is registered, or is a profit sharer, can check whether someone they are considering entering into a business arrangement with is registered for MGD.
The register is free to view.
You'll need to keep records for MGD and you'll need to show that the amount of MGD you've paid is the right amount.
Good record keeping is essential. If you don't keep the right records then you could face penalties - and if your records are clear and contain all the right information, HMRC will find that checking them is straightforward.
If you're liable to pay MGD then you're a 'revenue trader'. Revenue traders must keep certain records and these are fully explained in Notice 206.
If you're registered for VAT then your records may contain information that's also needed for MGD purposes. If your records are cross-referenced, there is a clear link between them (an audit trail) and they are easy to follow, then HMRC doesn't expect you to duplicate your records. However, you do need to know that separate record keeping rules apply for VAT and you can find out more in Notice 700 'The VAT Guide', and Notice 706 'Partial Exemption'.
Everyone registered for MGD must keep an Excise Duty Account. This must show all the information needed to complete each MGD return, and how the figures on the return have been calculated. HMRC doesn't specify how you keep your records but they must contain all of the information you've used to complete your returns.
You'll need to keep records that show:
You need to keep all of your MGD records for 4 years. Records and accounts are normally kept at the main place of business, but you can keep your records somewhere else if you need to.
HMRC might ask to see your records at your main place of business or where your business is registered. They have the legal right to check your duty calculations and take copies of any books, accounts, records or other paperwork relating to your business.
If a machine offers a game where you can win both cash and non-cash prizes, then the amount of the cash prize determines whether MGD is due or not. If the cost to play the game is less than the biggest cash prize that could be won then MGD is due.
If a machine offers several games, some of which are dutiable machine games and some of which are not (for example, you can't win a cash prize and might be played for fun), then MGD will be due on the dutiable machine games but not the non-dutiable games. The non dutiable machine games may be subject to VAT.
Machines won't be affected by MGD if the only prizes offered are non-cash prizes (for example crane-grabs offering only non-cash prizes). Redemption machines won't be affected by MGD if the redemption tickets can't be exchanged for cash, and no cash prizes are on offer from the machine alongside redemption tickets. These machines will still be affected by VAT.
MGD is due on the total net takings from the playing of dutiable machine games. Net takings means what is charged to play the games less the amount paid out as winnings.
You can treat as winnings (and deduct from MGD liability) the VAT inclusive cost of non-cash prizes given out for play on machines subject to MGD (that is machines which also offer a cash prize more than the cost to play the game). In this case, you must not deduct the value of non-cash prizes until they are actually given out to the winners.
If you don't know the exact value of non-cash prizes given out for play on machines subject to MGD, perhaps because you have a single stock of non-cash prizes and you use some for dutiable games and some for non-dutiable games, then you can use a reasonable estimate.
If a machine offers both dutiable machine games and other activities (for example 'just for fun' games that don't offer a prize), the net takings from playing of the dutiable machine games will be subject to MGD and the remainder subject to VAT.
Everything that is a 'free play' won't be included in the calculation of net takings. When you're working out your net takings you can still take away winnings from these plays.
You can carry across a negative net duty liability to the next (and future) return periods, but you can't get a refund for it.
In certain circumstances, if you can't give exact figures, you can use an apportionment (that is a reasonable estimate), as long as it's been based on a reasonable method.
HMRC might accept the following reasons for apportionment:
HMRC may wish to check that you have good reason for not being able to provide exact figures and that the apportionment method you are using produces a reasonable and fair result.
Once you're registered for MGD you must send HMRC regular returns and payments.
The standard return period will be three calendar months.
Your MGD return should be with HMRC 30 days after the end of the return period. It will need to give details of the net takings from dutiable machine games.
In the case of groups, a return to cover all group members should be submitted by the group representative member.
When you register, you will have the opportunity to ask HMRC to use different accounting periods. Non-standard accounting periods must start and end within 16 days of what would have been the standard accounting period and as a result may be of unequal lengths.
If you do not apply for different accounting periods, or we cannot agree to your request, you must use the standard accounting periods. If we refuse to allow you different accounting periods, you can appeal against our decision.
Once you have signed up to use HMRC's Online Service you'll be able to submit any subsequent returns online. If you complete an online return you’ll have access to online help which will make it easier to complete. You can also keep track of your MGD affairs by accessing details of previously submitted returns and payments.
If you have not signed up to use HMRC’s Online Service, you will need to submit a paper return (MGD 6). A paper return will be issued after the end of each accounting period and must be sent to HMRC by the 30th day following the end of the accounting period.
Important: If you registered for MGD on paper and would like to complete an online return and you haven’t signed up to use HMRC’s Online Service you’ll need to sign up and enroll for MGD.
If you are a 'new user' and signing up to use HMRC Online Services for the first time (or if you have an existing Government Gateway account as an 'Individual') you will need to create an HMRC online account.
You’ll be able to pay MGD electronically by:
There are a number of situations where you might receive a penalty:
Machine games that you pay MGD on will be exempt from VAT, and businesses registered for VAT might become either fully exempt or partially exempt. This means you may not be able to claim all or some of the input tax on your purchases.
If you're registered for VAT, you should read the guidance relating to VAT and exemption as your VAT calculations may be affected. The rules for VAT will be amended to show these changes.