News: HMRC Announcement on SWP
- Date: 02/08/2010
- Source: Poppleston Allen
- Author/Solicitor: Nick Arron
HMRC have made an announcement following their review of 'skill with prize' (SWP) games instigated earlier this year, a review that concluded on June. 30th. The review covers three areas: the definition of a skill with prize machine, the scope of Amusement Machine Licence Duty and arrears of Amusement Machine Licence Duty (AMLD).
The announcement will end some of the uncertainty regarding SWP machines and AMLD, particularly with regard to the quiz machines. But for large sectors of the industry, it will not provide the clarity desired.
The announcement has been approved by the Gambling Commission, who have reissued their Guidance - "Is a prize machine a gaming machine?" which was published in May of this year. They have inserted a new paragraph in which they state that it becomes increasingly difficult to manufacture a compliant SWP machine that does not involve an element of chance and is economically viable, when it offers prizes beyond £50. The £50 prize limit was set by the industry trade body in discussions with the Commission. Clearly, the Commission is more likely to raise questions of machines with prizes above this limit.
The enforcement date of the announcement is 1st November 2010 which gives manufacturers and operators only a few months to comply with the details and in particular, the characteristics of SWPs listed. When considering whether a prize machine is a gaming machine, HMRC list eight criteria for the characteristics. These are:-
1. The game must be a test of skill, such as knowledge, dexterity, visual recognition, logic, memory, reaction, hand to eye coordination, numerical and lexical ability or a mixture of any of these skills.
2. The game rules and game play instructions must be available to the player prior to credting the game.
3. The game must not look like a recognised game of chance. Compliance will depend upon the whole presentation of the game. They list the characteristics the game should seek to avoid, including gaming themes, such as casino games, bingo or lotteries, features associated with gambling, such as fruit symbols, words such as 'lucky', 'random' and 'jackpot' and those associated with chance or gambling, and repeat win features where players win a second prize without completing successfully another game of skill.
4. There should be a reasonable amount of player interaction to win a prize.
5. All advertised prizes must be available to win in each game.
6. The level and type of skills required to win, which includes reaction time, must be reasonable considering the context of the game in question. They then give indicative examples such as time to react to a visual stimulus, sufficient time to read questions and give answers, make observations or memorise symbols or cards.
7. The levels of difficulty may vary from game to game for the purpose of challenging a player's use of skill provided that it is within reasonable bounds.
8. The game must not enable the operator to change the game settings so that the game ceases to be one in which the level and type of skill required to win is reasonable, as at point 6 above.
Although these characteristics will provide some clarity to manufacturers, I'd suggest most will still seek further guidance from HMRC on their products.
With the looming 1st November 2010 deadline, operators and those making gaming machines available for use in premises, will want written confirmation from the manufacturers that - a game is an SWP in accordance with the new characteristics, it is not a gaming machine for the purposes of AMLD and the Gambling Act 2005 and therefore requiring a licence or a permit to make it available for use.
The Gambling Commission are currently conducting operations regarding a number of machines involving roulette and stackers and it"s important to say that the HMRC announcement has no bearing on these activities.
On the scope and arrears of AMLD, HMRC have reiterated their statement that if a skill game contains any feature that introduces an element of chance into the game as defined by the 8 characteristics, then it is a gaming machine and liable to AMLD including arrears.
HMRC has provided clarity regarding quiz games based upon the Monopoly and Cluedo board games. They have accepted that the random number generator within the game, displayed as a dice, does not affect the player's chance of winning and that neither of these games are liable to AMLD. I am sure there will be further rulings in the future on other similar machines. At least in this area, we have certainty and common sense has prevailed.
The full announcement can be found at http://customs.hmrc.gov.uk/channelsPortalWebApp/downloadFile?contentID=HMCE_PROD1_030644
For more information please contact Nick Arron .
