Sportech and Rank boosted by VAT interest verdict
Operators could see repayments double after UK High Court ruled compound interest to be applied on VAT claims
Egaming operators Sportech and the Rank Group have been boosted by a ruling in the UK High Court concerning their claims for refunds on overpaid VAT.
The High Court ruled on Friday that refunds for VAT overpayments, which both Sportech and Rank are pursuing, should be subject to ‘compound’ rather than ‘simply’ interest, which effectively increases the amount of money the two firms could expect if their hearings are successful.
Sportech’s £95m claim could rise to £160m while Rank’s claim for £275m could double after the verdict; however HM Revenue & Customs (HMRC) is expected to appeal the ruling.
Sportech’s case relates to taxes paid on a ‘Spot the Ball’ competition run between 1979-1996. The firm recently upgraded the value of its claim to £95m from the previous estimate of around £80m.
HMRC’s appeal against the Spot the Ball ruling is to be heard by the Upper Tier of the tax tribunal at the end of next month after the public body appealed the First-tier Tax Tribunal’s decision in Sportech’s favour in May last year.
Success for Sportech would have significant implications for the firm’s share price and Panmure Gordon this morning upgraded the group’s target price by 31p to 184p, a potential upside of 112%. Sportech’s share price was today up 2p to 89p at the time of writing.
“We view Friday’s ruling as significant for the Sportech investment case given the size of the potential repayment,” Simon French, executive director at Panmure Gordon, said.
Rank’s case is slightly more complicated given that it was forced to hand back the £31m it was paid by the HMRC following a verdict issued by the UK Court of Appeal, however the operator is set to appeal that decision at the Supreme Court.