Cases are not often heard in the Isle of Man, but case law from the UK is relevant to the application of VAT in the Island. Given the importance of the gaming sector to the Isle of Man one case relevant to this sector was heard in the UK during 2012.
The exemption applying to gaming is tightly drawn – “the provision of any facilities for the placing of bets …”. Rating Report Ltd (“RRL”) is a software development company who created a database and betting models for a variety of popular sports.
They placed bets on sporting events on behalf of members of their sports investment fund, or syndicate. RRL placed bets on behalf of the syndicate, charging a fee based on the value of the fund and from successful bets. Although RRL took an active part in the betting process they took no actual risk, which HMRC argued was necessary to permit the exemption.
This point had already been made in the ECJ case of United Utilities, which held that for the exemption to apply the supplier must have a direct risk in respect of any bets or stakes placed. As such RRL was held to be an administrative company and their services were liable to VAT.