[2011] UKFTT 143 (TC)

TC01017

Appeal number TC/2009/13846

BINGO DUTY –whether an admission fee may be deducted from the takings before assessing the bingo duty – admission fees payable at the door for first and third sessions but included in bingo ticket price in second and fourth sessions – appellant assessed to £247,363 additional bingo duty- tribunal asked to decide whether admission charge is deductable as a matter of principle- yes where identified as such and paid on entering the premises- appeal allowed in part- assessment to be re-assessed.

FIRST-TIER TRIBUNAL

TAX 

	COSMO LEISURE LIMITED	Appellant

	- and -

	THE COMMISSIONERS FOR HER MAJESTY’S
	REVENUE AND CUSTOMS	Respondents

				TRIBUNAL: DAVID S PORTER (JUDGE)
					            MISS SUSAN C STOTT (MEMBER)

Sitting in public at Manchester on 6 & 7 January 2011

Mr Timothy Brown, of counsel, for the Appellant

Mr Owain Thomas, of counsel, instructed by the General Counsel and Solicitor to HM Revenue and Customs, for the Respondents

© CROWN COPYRIGHT 2011

DECISION

1.	The Appellant (Cosmo) appeals against an assessment raised by the Respondents (HMRC) in the sum of £247,363 for the period 01/5/06 to 29/03/09 being additional bingo duty arising from HMRC refusal to allow the admission charges for the two bingo halls to be deducted for the purposes of assessing the duty. The Appellant says that the legislation and Notices from HMRC allow a deduction of an admission fee and that their customers are aware that such a fee will be deduct as indicated on the transparency notices in the entrances to each bingo hall. HMRC say that the alleged admission fee is no more than a right to play bingo, particularly when the admission fee is notionally included in the price of a book of bingo games for the second sessions in the afternoons and evenings.. There is no other reason why people would attend the two bingo halls. As a result the admission fee cannot be deducted. We have been asked to decide, as a matter of principle, whether the admission fee can, in the circumstances, properly be deducted. We have not been asked to amend the assessment. The parties have accepted that the calculation of the assessment is otherwise to best judgment.
2.	Mr Owain Thomas, of counsel, appeared for HMRC and called Mr Robert Cairns, who gave evidence under oath. Mr Timothy Brown, of counsel, appeared for Cosmo and called John Downs, managing director and Keith Lee, manager, who both gave evidence under oath. Three agreed paginated bundles were made available for the tribunal
The Law
3.	It would be helpful for the purposes of this appeal to first consider the law applicable to this appeal, as we understand it, and the historical background for the provisions of the Betting and Gaming Duties Act 1981 (as amended by section 9(b)) of the Finance Act 2003). Sections 3 (1) and 14 of the Gaming Act 1968 [BGDA 1981]  provided;-
		3 (1)  Subject to the following provisions of this section, no gaming to which this part of this Act applies shall take place in circumstances where (apart from any stakes hazarded) a charge, in money or money’s worth, is made in respect of that gaming.
    (2)   Subject to the next following subsection, any admission charge shall, unless the contrary is proved, be taken to be a charge made as mentioned under subsection (1) of this section.
	  14 (1) ……………
  (2)  Regulations made under this section may provide that charges which, apart from the regulations, would be prohibited under section 3 of this Act as applied by the preceding subsection may be made as follows, that is to say:-
(a) where the gaming takes place on premises in respect of which a licence under this Act is for the time being  in force, such charges may, in such circumstances as may be prescribed by the regulations, be made if they comply with such conditions as are here prescribed;
(b)………………..
(3) Without prejudice to the application of section 51(3) of this Act, regulations made for the purposes of subsection (2) (a) of this section may enable different charges to be made in respect of different facilities (whether provided in different parts of the same premises or by way of different games or of the same game played at different tables or otherwise) or in respect of gaming facilities provided on any premises during different sessions of play.
(4) No charge shall be made in accordance with subsection 2(a) of this section unless particulars of the charges (our emphasis) and of the circumstances in which they are chargeable-
	(a) are displayed on the premises,…
            (b)  ……….
 3.  The Gaming Clubs (Hours and Charges) (amendment) Regulations 2000: SI/2000/899 provide:-
Bingo Charges 
	(5) (1) Any charge which, apart from this regulation, would be prohibited by section 3 of the Act as applied by section 14 (1)  of the Act, may be made in respect of gaming on bingo club premises, subject to the following conditions, namely;
(a) the charge shall be in respect of an individual person and shall be for his admission to premises in respect of which gaming in the form of playing bingo takes place or otherwise in respect of his participation in a game of bingo on those premises
(b) in the case of admission the charge shall not exceed £10. per day. (now £20 2002 Regulations SI 2002/1902)
         (2) In the case of a charge for admission, a notice of that charge (our emphasis) shall be displayed on the premises at or near the principal entrance.
(Note: From the above it is clear that the historical legislation and regulations anticipated that, in certain circumstances, there could be a charge for admission, which needed to be identified for the benefit of members, and which would not be taken into account when assessing the bingo duty.)
4.	 Section 17 of BGDA 1981provides:-
(1)	a duty to excise, to be known as bingo duty, shall be charged-
(a)	on the playing of bingo in the United Kingdom, and
(b)	at the rate of 20 per cent of a person’s bingo promotion profits for an accounting period.
(2)	…………

(3)	The amount of a person’s bingo promotion profits for an accounting period is-
(a)	the amount of the person’s bingo receipts for the period (calculated in accordance with section 19), minus
(b)	the amount of his expenditure on bingo winnings for the period  (calculated in accordance with section 20)
(Note: The rate of duty at the material times was 15% and it was charged in addition to VAT.)
 Section 19 of BGDA 1981, which concerns bingo receipts provided at the time relevant to this appeal 
(1)	A person has bingo receipts for an accounting period if payments fall due in the period in respect of entitlement to participate in bingo promoted by him.
(2)	…..
(3)	For the purposes of subsections (1) and (2) –
a.	….
b.	….
c.	….
d.	It is immaterial whether an amount is described as a fee for participation, as a stake, or partly as one and partly as the other, and
e.	Where a sum is paid partly in respect of entitlement to participate in a game of bingo and partly in respect of another matter
i.	such part of the sum as is applied to, or properly attributed to, entitlement to participate in the game shall be treated as an amount falling due in respect of entitlement to participate in the game, and
ii.	the remainder shall be disregarded.
Section 20 BGDA 1981 provides in material part:
(1)	a person’s expenditure on bingo winnings for an accounting period is the aggregate of the value of the prize money provided by him in that period by way of winnings at bingo promoted by him
Section 20 C (5) BGDA 1981 provides:
(5) In those provisions a reference to entitlement to participate in a game of bingo includes a reference to an opportunity (our emphasis) to participate in a game of bingo in respect of which a charge is made (whether by way of fee for participation, a stake, or both)
5. We consider that the bingo legislation anticipates that a deduction may be claimed for an admission fee. Furthermore, when applying for a licence, the licensing board accepted that there could be an admission fee of no more than £10 (now £20). We understand that VAT was charged in addition to bingo duty at the time of the games the subject of this appeal In those circumstances it seems to us that it would be sensible to consider the terms of the VAT regulations. VAT Notice 701/27 (which cancelled and replaced Notice 701/27 Bingo (March 2002) provides;
	1.3 What’s Changed ?
This notice updates and replaces the March 2002 edition. It has been updated to include the changes to the law in the light of the Gaming Act 2005, in force from 1 September 2007………
2.2 What is the VAT liability of my other income? 
•	Admission charges for entry to premises where bingo is played are standard rated.
         3.1 How do I apportion composite charges ?
You may make one composite charge to each player for admission, participation and session charges, and stake money. To work out your VAT you will need to allocate the amount of your charge to each part. You must first calculate and deduct any amount due for admission….
[Note: This provision appears to mirror the provisions contained in section 19 BGDA 1981 (3) (e) (ii) set out above in relation to another matter.]
The internal Customs and Excise Guidance, Notices and Information Sheets indicates at: 
	20.2 Admission charges and entry fees.
These are paid by punters to enter any establishment where, in the context of this exemption, bingo takes place. It is distinct from the stake money and participation/session charges because it does no more than allow the player into the bingo club or a specific part thereof. Admission charges are specifically excluded from exemption by note (1) (a) to Group 4 and are standard rated.
We therefore need to consider, in the light of the above, whether an identifiable payment for admission, or even an inclusive fee included in the payment for a book of bingo games, may be allowed as a deduction when assessing the bingo duty or whether either or both the payments amount to a right to participate in a game of bingo, as provided by The Gaming Clubs (Hours and Charges) (amendment) Regulations 2000: SI/2000/899 section 5 (1) (a)
The Facts
6.   Both Mr John Downs, (Mr Downs) a director of Cosmo and the major shareholder of the group of companies, of which Cosmo is one, and Mr Keith Lee, (Mr Lee), the manager of the Stalybridge Bingo Hall, gave evidence under oath. We were told that Cosmo operates two bingo halls, one in Stalybridge and the other in Eccles. The clubs both operate on a similar basis and are generally similar in their entrance layout. A member has to swipe his/her card at the entrance and receives a receipt indicating when they arrived and the amount of the admission charge. An example provided related to a Mrs Pilkington and revealed that she arrived at 18:20 and paid £0.80 for admission. This gave her access to the main bingo halls, the gaming machines, catering and licensed bar facilities. Both clubs run four daily sessions of bingo; two during the day - between 11.00am to 1.30pm; and 1.30pm to 3.00pm; and two in the late afternoon and evening,- between 3.00pm and 7.30pm; and 7.30pm to 9.30pm. Everyone, who attends, has to be a member of the clubs, but there is no membership fee. They are given a membership card, which they swipe at a machine so that they can pay to go into the club. They pay 80 pence to enter the bingo hall at Stalybridge, reduced to 50p for pensioners and, if the member intends to play bingo he or she is provided with a free bingo game book up to 11.40am. It appears that the admission charge for the first session for members at Eccles is only 50 pence, but there is a separate charge for bingo books. At the beginning of the second sessions, at 1.30pm, a variable admission fee is notionally included in the price of the first set of bingo books for that session at both clubs. It was unclear whether members were aware of this, not least because they had paid 50 or 80 pence when they entered the premises. We were shown copies of the “Transparency Notices” at the entrance to Stalybridge. The “Transparency Notice” on the reception desk reveals that the admission charge for the first session 10.00am to 1.29pm Monday to Friday; 10.00am to 1.00pm Saturday; 10.00am to 2.09 Sunday is up to 80p. For the second sessions 1.30pm (1.50 sat) to 3.00pm Monday to Friday; 2.10pm to 3.00pm Sun is up to 200 pence. There is a similar break down for the evening sessions in the same “up to” amounts. Senior citizens are entitled to a discount of 20p. Mr Cairns, who appeared for HMRC, in his evidence stated that the amount of such admissions as were notionally included in the price of the main bingo tickets was calculated using the number of customers who had swiped their membership cards. If further bingo books were purchased for that session they were charged at the same price but no notional admission fee was deducted by Cosmo when calculating the deductions for bingo duty purposes. Mr Lee was asked what happened if somebody wished to use two books for a session. He explained that that very rarely happened as it was difficult to oversee two books at the same time. HMRC had, prior to the hearing, conceded that there was a legitimate admission fee when members attended at Eccles for the first session. Mr Thomas withdrew that concession at the start of the hearing.
7.	For the early sessions in the afternoon at 3.00 pm 80 pence was charged in both clubs for admission to the facilities. A separate charge was made for the books of  bingo games for that session. Similarly there was no admission fee payable for the first of the two sessions in the evening at 7.30 pm but a similar notional admission fee of £2 in Stalybridge and £1 in Eccles was deduct as explained above. Again there was a separate charge for the books of bingo games for that session. Mr Lee explained that as individuals stayed on after the first sessions, the club did not want them to have to leave and return again, when they had already paid to attend. He conceded that some people, who had paid to play in the first session, might stay in the building but not play bingo in the second sessions. HMRC then suggested that such people would have had the use of the other facilities of the club in the second session without payment. Mr Lee indicated that his staff at Stalybridge knew 90% of the people who attended and that they would ask such a person to pay for the use of the facilities in the second session. He also confirmed that some 2500 to 3000 people attend the club each week. Whilst we imagine many of those may be people, who attended on more than one session, we do not believe that the staff are able to police those people, who had not paid and who stayed to use the other facilities. Mr Lee indicated that there are in the order of 80 to 100 people in the afternoon sessions and 200 to 400 people in the evening sessions. Mr Lee advised that he and the manager at Eccles had discretion to fix the admission fee to be appropriate for the prizes, promotions and value offered on the session in question. He said that the members were very aware of the cost involved. Competition in the localities was substantial. Both he and the Eccles’ manager needed to be careful as to the level of the admission fees. 
8.	Mr Cairns, who gave evidence under oath for HMRC, told us that as well as using paper bingo books Cosmo also used electronic hand held terminals known as “Planets” to allow members to play the main stage bingo. The minimum purchase on the planet terminals was 12 sets of games, whereas the standard paper book contained 6 sets. When the member paid for the games, using the planet terminals, additional sets were given. Hence, when a member paid for 24 sets he or she received 36 sets. A portion of each payment for a planet terminal was treated as one admission, with the balance treated as stake money. The portion treated as admission corresponded to the portion of paper book fees treated as admission for the same session
9.	 Mr Lee had, at the request of HMRC, produced through David Miller, Cosmo’s VAT representative, a break down of the actual admission charges raised by Cosmo for the second sessions in the afternoons and evenings for the purposes of the bingo duty. The email sent by David Miller states as follows:-
 “(1) In respect of how variable admission charges were set the admission charges were set at levels that Cosmo feel were appropriate for the prizes, promotions and value offered on the session in question.
   (2) To evidence the variable admission charges, I show a synopsis of the admission charge levied per person in the second sessions of both the afternoon and evening sessions (referred to as the second and fourth sessions of the day) as well as overall of admission charges for each session for a sample period of the week ending 4th November 2007. The Appellant can also confirm that this level of variable charge is consistent with the same actual admission charge fee being levied for the same sessions within the week ending 17 February 2008. 
                       Stalybridge                     			Eccles
       2007        Afternoon Total   Evening  Total Afternoon Total  Evening Total
Mon 29th Oct    £1.80	  £244.80   £3.00    £828.00     £3.00  £267.00  nil        nil
Tue 30th Oct     £1.80    £293.40   £3.00    £1059        £3.00  £nil        £3.00  £633.00
Wed 31st Oct    £1.80    £214.20   £ nil        nil            £3.00  £300.00 £ nil   £  nil 
Thu  1st Nov     £ nil       nil          £4.50     £1687.50   £3.00  £228.00  £3.00 £741.00
Fri    2nd Nov    £ nil       nil          £4.50     £1066.50   £3.00  £303.00  £3.00 £723.00
Sa t   3rd Nov    £1.80   £381.60    £4.50     £1039.50   £3.00 £495.00   £3.00 £606.00
Sun   4th Nov    £1.80   £280.80    £5.00     £1850.00   £3.00 £453.00   £3.00 £1086.00
In respect of the sample week 4th November 2007 you will note for Eccles a standard admission charge applied for most sessions being £3.00, the sessions with nil admission charge being when there was a promotion of ‘free admission’ to the premises and so no admission has (correctly) been shown.”
Mr Lee conceded that the members were probably unconcerned about the admission charge. The members, when they played bingo, usually attend with a set amount in mind to spend. So long as the prize money was commensurate with the amount they have to spend they were unconcerned. We believe, however, that members understood that they had paid the admission fee when they swiped their membership cards to enter the hall and were totally unaware of the additional charge for admission included in the price of the first books of bingo games in the afternoon and evening sessions.  Mr Lee had also prepared spread sheets for both clubs, which had been requested by HMRC, which showed the total liability for VAT and Bingo duty for a period of one week starting on 4 November 2007. These revealed for Stalybridge:
	Total taken for all games in the week			£45,565.21
	Less prize money		 £46,444.48
Less discounts			 £  7,987.50		£54,431.98
-----------------------------------------------------------------------------
				Loss			           -(£8,866.77)
The figures did not include the admission charges for the week of £8,945.30 and the bingo element was loss making if the admission fees were included.. The admission fees in relation to Stalybridge before the deduction of bingo duty and VAT appear to amount to 88% of turnover. Mr Lee commented that bingo games did not make a profit. The clubs were dependent on their gaming machines to make their money.
9. HMRC had also required Cosmo to complete a questionnaire which Mr Lee had filled in for Mr Downs, who signed the form. The questionnaire confirmed that the admission fee was to allow members to use the club’s facilities. Question 8 enquired: 
“If a customer does not play main bingo but only mechanised bingo or a flyer game how is the admission charge calculated?” Answer: “Club facilities only available to members playing main session bingo. Admission charges same for everyone.”  
We were told that the clubs also provided bar and catering areas, and in the case of Stalybridge about 60 gaming machines. There are a lesser number of gaming machines at Eccles.  Mr Lee confirmed that he had worked in the bingo industry for 27 years and the businesses had always taken admission money. In fact, the clubs could charge up to £20 for admission. The clubs did not do so as pricing was very sensitive. Mr Lee told us that the local Church and the Citizens Advice Bureau recommended their parishioners and customers, particular some of the older people in the Stalybridge, to come to the club during the winter, as they could have something to eat, meet their friends and keep warm. We are satisfied that the bingo clubs provide more than just bingo and offer a useful meeting place for its members, who can have something to eat and drink, and who could also use the gaming machines,
10. Mr Brown referred the Tribunal to two letter addressed to the Clerk to the Magistrates in Ashton under Lyne dated 14 August 1999 and 9 February 2000 respectively. It had been necessary on those dates, to advise the magistrates of the prices of the admission and games. The admission prices in 1999 appear to have been 50 pence throughout. The admission charges in 2000 were 30 pence Monday to Friday and 50 pence for Saturday and Sunday. We are satisfied from that evidence that Cosmo have been charging for admission for many years and continue to do so.
The submissions.
11.	Mr Thomas submitted that the resolution of the dispute depends upon close attention to the statutory language.  The amount of Cosmo’s bingo promotion profits depended on its bingo receipts for an accounting period less its expenditure. Its expenditure is the aggregate of the value of the prizes provided by way of winnings in that period. Section 19 of BGDA 1981 provided at the time relevant to this appeal:
(1)  A person has bingo receipts for an accounting period if payments fall due in the period in respect of entitlement to participate in bingo promoted by him.
…..
3.	For the purposes of subsections (1) and (2) –
a.	….
b.	….
c.	….
d.	It is immaterial whether an amount is described as a fee for participation, as a stake, or partly as one and partly as the other, and
e.	Where a sum is paid partly in respect of entitlement to participate in a game of bingo and partly in respect of another matter
i.	such part of the sum as is applied to, or properly attributed to, entitlement to participate in the game shall be treated as an amount falling due in respect of entitlement to participate in the game, and
ii.	the remainder shall be disregarded.
Section 20 C (5) BGDA 1981 provides:
	(5)  In those provisions a reference to entitlement to participate in a game of bingo includes a reference to an opportunity to participate in a game of bingo in respect of which a charge is made (whether by way of fee for participation, a stake, or both).
He submitted that it is important to establish the breadth of the concept of “bingo receipts” as it is not a limiting definition. Bingo receipts are payments. There is no doubt that the admission charges are payments but they must be “in respect of the entitlement to participate in bingo” and they are to be construed by reference to section 20 C (5), which specifically includes a reference to an opportunity to participate. It is clear that it is not merely a payment for playing bingo, which is included, but also any payments which are in respect of an entitlement or opportunity to play bingo. On that basis there is no doubt that the admission fees are included as they are paid in respect of entitlement to play bingo. Without such a payment to enter the bingo hall it would not be possible to play. This is true of for both the fees for admission and the subsequent notional charge for the second sessions in the afternoon and evenings. Sub-section (ii) of section 3 (e) of section 19 of BGDA 1981 requires that the sums must realistically be attributable to something other than bingo. He submitted that the café, fruit machines, toilets, bar etc are ancillary to the playing of bingo and that there is no justification for disregarding any of the sums for the purposes of the duty as the nature of the entire charge is in respect of the entitlement to participate in bingo. The foregoing analysis is entirely consistent with and no wider than the definition of section 344 of the gambling Act 2005 which, while it does not govern excise duty, defines participation fees as “an amount paid in respect of entitlement to participate in gambling” and for that purpose the legislation provides that:
(a)	it is immaterial:-
(i)	   how a fee is described
(ii)	whether a fee is payable in money or in money’s worth
(iii)	when and how a fee is payable
(iv)	to whom a fee is payable 
(v)	 a charge for admission to premises where gambling takes place shall be  treated as a participation fee.
As a consequence of the above, Mr Thomas submitted that all bingo players must pay an “admission” charge in order to play bingo and nobody plays without doing so. Both premises are essentially bingo halls and there are no other facilities which justify a separate admission fee. In any event the admission fees for the main sessions, while advertised to the members, are variable at the discretion of Cosmo and are included in the price of the planets’ terminals and 
the first set of books in the second sessions. Cosmo provides free books on some occasions when they are promoting the clubs. The effect of the admission charges on the profitability of the business can be gauged by the spreadsheets which show that the admission charge accounts for the majority of the profit on bingo. On the figures provided for Stalybridge, 88% of the bingo profit is accounted for by the “admission” charge and for Eccles the figure is 68%. Cosmo’s reliance on the Public Notices is misconceived. The Public Notices are only for guidance and do not have the force of law. The Public Notice, where it refers to charges for admission, is intended to refer to admission charges which are not admission charges referable to the opportunity to pay bingo in bingo halls, but rather admission charges which are properly referable to other services. The Tribunal must decide that the admission fees, in both their forms, allow a member to participate in the bingo games and they are not therefore to be allowed as a deduction for bingo duty purposes.
12.	Mr Brown submitted that it was necessary to consider the contractual position of the members and what the objective characteristics were rather than the economic effect of what was agreed.  The “transparency notice” identified what the admission fees were and these allowed members to use the bar, and gaming machines and to take advantage of the catering facilities. Those were the facilities which the members were paying for. If HMRC are correct in their submissions, that the admission fee is solely to allow a member to participate in a game of bingo, there could never be an admission fee for a bingo hall.  HMRC had conceded, prior to the hearing, that there was an available admission charge at Eccles. That must be correct, as the earlier legislation had allowed an admission charge. At the time of the redrafting of the legislation in 2003, the draftsman had not indicated that admission charges were to be disregarded. If it had been intended that no admission charges would be allowed for the entry to bingo halls, the draftsman would have said so. Any games played on the planet terminals provided, in any event, for an admission fee on their purchase. The assessment, the subject of this appeal, includes all the admission fees, including those in relation to the planet terminals. Cosmo’s case is that the inclusion of an admission charge in the all-in fee negates the need for members, who remain on the premises after the first and third sessions, to have to queue up again to make a separate payment to enter the premises before purchasing books for the second and fourth sessions. The charge for admission is levied at the points of sale in accordance with the club’s rules, which are displayed within the clubs and on the transparency and admission notices. Any member arriving after the second and fourth sessions have commenced is required to pay the admission charge, purchase a set of books for an all-in charge or they will be refused entry. He submitted that the management of Cosmo are able to identify if any member has remained on the premises after the first and third sessions and who have not purchased a set of books for the second and fourth sessions, thereby trying to avoid paying an admission charge for the second and fourth sessions.  Members are aware that the all-in fee includes an admission fee up to the amounts identified in the transparency notice. Both clubs had been charging an admission fee for many years prior to the change in the law as evidenced by the notices, which had to be lodged with the Magistrates’ Court.  The legislation clearly allows for  all-in fees to be charged, including an admission charge. It is accepted by HMRC that admission charges can be disregarded for the purposes of section 19 (3) (c) (e) of BDGA 1981. HMRC’s Notice (relating to VAT and bingo receipts) states “You should not include any payments within the bingo receipts calculation, that do not relate to playing bingo, such as admission fees, membership fees or catering charges”. Section 42, of the same Notice, “If you make a single charge that allows a player to more than play bingo, you must divide the separate amounts as follows….”. There then follows a worked example including an admission charge. Mr Brown submitted that no-one was allowed to enter the premises without paying an admission charge. The charge for admission was what it said it was. The free books for playing bingo were promotional tools to encourage members into the clubs to spend money on other things e.g. food, drink and the gaming machines. In the circumstances the Tribunal should find that there was an admission charge to enter the club premises and the inclusion of that charge in the bingo books for the second and fourth sessions was of an amount identified in the transparency notice and should therefore be allowed as a deduction in calculating the bingo duty.
The decision
13.	We have considered the law and the facts and have decided that there can be admission charges, as evidenced by the swiping of the membership cards to gain entrance to the clubs. The exact amount of that charge has to be indentified in the transparency notice. The inclusion of an unspecified admission charge on the purchase of a book to play bingo cannot be treated as an admission charge, as a member would think that he or she was buying a book to play bingo. We are satisfied from the facts in this case that the clubs offer more than the right to play bingo. They are clearly places where older members of the public go for social interaction. We are unsure whether bingo would necessarily be the prime motivation. Mr Lee confirmed that the clubs made their money out of the gaming machines of which there were some 60 machines in the Stalybridge Club. We understood that those machines were used extensively even when bingo was being played. Even if bingo is the predominant reason for attending the club we have decided that the catering, the bar and gaming machines are not ancillary to the bingo as suggested by Mr Thomas. As a result we consider that there is a “remainder” within the terms of section 19 (3) (e) (ii) of the BGDA 1981. Unfortunately the matter does not end there. The earlier legislation, the letters to the Magistrates’ Court and common sense all require the actual admission charge to be indentified. As a result, it is not sufficient to prove that there are other facilities on offer. It is essential that a distinction is made as to the various charges so that a person attending to play bingo knows the actual amount of the admission charge, otherwise it cannot be deducted. A notice which states the charge is up to a given amount is not satisfactory. This would allow an operator, as in this case, to manipulate the price of the entry to reduce the amount of bingo duty they need to pay. It is not part of the legislation to allow such a vague method of accounting for the duty. We therefore have decided, as HMRC had in respect of Eccles before withdrawing their agreement that as the members must believe that the amount they have to pay to enter the club is the admission fee, such amounts can be treated as a deduction for the purposes of assessing the bingo duty. The figures of 80 pence and 50 pence are of a consistent order over the years and we consider that the members understood those to be the charges. The ‘transparency notice’ identified the normal charges for the first sessions as 80 pence and to that extent the charge has been specifically identified,
14.	The position with regard to the all-in fee is quite different. We agree with Mr Thomas that the price of the all-in books falls within section 20 C (5) BGDA 1981 as it provides “an opportunity to participate in a game of bingo”. We very much doubt that the members are aware of the varying contribution for admission deducted from their payments for the books of bingo games. In fact we believe that they understand that they have paid to come in, when they swipe their cards.  The transparency notice with regard to a charge of up to 200 pence for the second session is therefore unclear. A member must believe that they are paying for a book to play bingo. The book consists of 6 bingo games, and as far as we understand it, they make no reference to the amount being charge for admission with regard to the second two sessions. In point of fact this would not be possible because the same books are also used in the first sessions. The books allow a member to participate in a bingo game and no more. For the purposes of this appeal this means that the admission fees accounted for in the bingo books cannot be allowed as a deduction for bingo duty purposes. This does not mean that Cosmo can not recover the cost of admission fees in the future. To do so they will need to identify what the admission fees for all, or each, of the sessions will be; indicate those amounts on reception in the’ transparency notice’; and arrange for the fee or fees to be paid when the members swipe their membership cards. Mr Lee has told us that pricing is very sensitive and we suspect that the members would fail to attend if the prices were set too high. Cosmo have to be transparent. What they cannot do is to set a variable admission price, which is not disclosed to the members, and which allows them to manipulate their profit to reduce their liability to bingo duty. We have therefore decided that Cosmo can deduct the entrance fee indentified on the swiped card receipts, but cannot claim any admission fee from the sale of the bingo books at an all-in price. We therefore allow the appeal in part.
15.	We were not asked to award costs and therefore award none.
16.	This document contains full findings of fact and reasons for the decision. Any party dissatisfied with this decision has a right to apply for permission to appeal against it pursuant to Rule 39 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009.   The application must be received by this Tribunal not later than 56 days after this decision is sent to that party.  The parties are referred to “Guidance to accompany a Decision from the First-tier Tribunal (Tax Chamber)” which accompanies and forms part of this decision notice.

TRIBUNAL JUDGE
RELEASE DATE:25 February 2011