Tag Archives: game-of-chance

Beyblades – a Customs Duty case

By   17 July 2018
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Latest from the courts

In the Court of Appeal (CA) case of Hasbro European Trading BV (Hasbro) the issue was whether Customs Duty (CD) was due on the import of Beyblades. If they fall within the definition of a toy CD is payable at 4.7%. However, if they are more accurately classified as a game they are treated as duty free – so a significant difference in import cost dependent on what, superficially, appears to be a somewhat question of semantics.

Beyblades 

For the purposes of the case, it is important to understand what a Beyblade is and how it is used.

Beyblade is the brand name for a line of spinning tops originally developed and manufactured by Tomy in Japan. The main novelty is that they are a series of items which are customisable, with interchangeable parts. A Beyblade is set in motion by means of a rip-cord powered launcher.

A “game” is played with two players. Each player is allowed  a number of Beyblades to choose from during a match. Players may use any parts available to them to make their Beyblades), but may not switch parts once a match has started. The first player to reach seven points wins. Points are awarded to the player based on how their Beyblade knocks out the opponent’s

  • One point is awarded if the opponent’s Beyblade stops spinning
  • One point is awarded if the opponent’s Beyblade is knocked out of the stadium or into a pocket on the edge of the ring
  • Two points are awarded if the opponent’s Beyblade breaks during a game

The Arguments

The case concerned the classification of Beyblades’. The appellant, Hasbro contended that Beyblades are correctly classified as “articles for … table or parlour games” under heading 9504 of the Combined Nomenclature. In contrast, HMRC maintained that Beyblades should be classified as “other toys” under heading 9503,  The First-tier Tribunal FTT and the Upper Tribunal (U’) both previously agreed with HMRC’s analysis.

Classification

There are “explanatory notes” to the Harmonised System (HSENNs). The CA ruled that the classification rule which prefers the most specific description does not apply at the level of the HSENs: they are an important guide to interpretation, but do not have force of law.

The Decision

The CA allowed the appeal and went against the decisions in the FTT and UT. The judge concluded that “In the circumstances, it seems to me to fall to us to decide which of the alternative headings provides the more specific description. In my view, it is heading 9504. As I see it, “articles for … parlour games” encompasses a more limited range of goods than “toys” and “more clearly identifies Beyblades”, particularly since, as I say, “articles for … parlour games” reflects the fact that Beyblades are meant to be used in games…”. The fact that Beyblades are used in a competitive scenario seems to have swung the decision which knocked out HMRC. Consequently, there was no CD payable as they fell to be duty free.

Commentary

It does beg the question; why did this issue need to get to the CA for the appellant to finally win (but of course, this isn’t the first case which has raised that question). Perseverance was clearly the key word here. If you are convinced that HMRC is wrong on ay matter, it really does pay to challenge any ruling.

VAT – Spot The Ball – Latest from the courts

By   9 May 2016
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Is Spot The Ball a game? And if it is, is it a game of chance? (And therefore exempt from VAT).

In the case of IFX Investment Company Ltd & ORS the main issue was whether the First-tier Tribunal (FtT) were wrong to hold that the appellants’ “Spot The Ball” competitions was exempt under the gaming exemption in Value Added Tax Act 1994, Schedule 9 Group 4. To fall within the gaming exemption, Spot The Ball must be a “game of chance” within the meaning of the Gaming Act 1968. The dispute was over the word “game” and the words “of chance”.

The Court of Appeal (CoA) considered whether the FtT decision in favour of the appellant that the supply was exempt or whether HMRC’s successful appeal to the Upper-tier Tribunal (UtT) should stand.

The court heard form the promoters that while there was an element of skill in determining roughly where the panel that decided where the ball should be would actually place it, the precise placement of the cross was essentially a matter of chance.  HMRC insisted that the competitors were not “playing a game” as they advanced the argument that a “game” required interaction between the players. and therefore Spot The Ball could not be considered playing a game of chance such that the supply is standard rated.

The UtT  deemed that Spot The Ball is “played” in “solitary isolation” and does not involve any interaction between competitors. The only contract is between the operator and the individual competitor. Additionally the act of placing a cross on the coupon was not “playing”

The CoA disagreed with the UtT’s decision and concluded that the FtT made a finding that Spot The Ball was a game of chance and there was no reason to disturb this decision. The FtT was correct to hold that there is no inter-player interaction rule. Previous case law clearly contemplates that there can be a game without the contestants being in communication with each other. Consequently, it restored the FtT’s decision and the supplies are exempt.

This case has brought home to me two (non-VAT) things; 1) That Spot The Ball is still around, and that 2) I always thought that one had to actually put a cross where the ball actually was, rather than where a judging panel thought the ball was likely to be.  One lives and learns. I’m also constantly surprised that “the pools” still exist in these days of lotteries and lotto and other promotions.

Case here