IFX Investment Company Ltd and Others v Revenue and Customs Commissioners

JurisdictionEngland & Wales
CourtCourt of Appeal (Civil Division)
JudgeLady Justice Arden,Lord Justice Tomlinson,Mr Justice Morgan
Judgment Date04 May 2016
Neutral Citation[2016] EWCA Civ 436
Docket NumberCase No: A3/2014/3908

[2016] EWCA Civ 436






Mr Justice Norris

[2014] UKUT 398 (TCC)

Royal Courts of Justice

Strand, London, WC2A 2LL


Lady Justice Arden

Lord Justice Tomlinson


Mr Justice Morgan

Case No: A3/2014/3908

Ifx Investment Company Ltd and Ors
The Commissioners for Her Majesty's Revenue and Customs

Jonathan Peacock QC (instructed by Forbes Hall LLP) for the Appellants

Andrew Macnab (instructed by General Counsel and Solicitor to HMRC) for the Respondents

Hearing date: Friday 8 th April 2016

Lady Justice Arden

The principal issue on this appeal from the Upper Tribunal (Norris J) ("the UT") is whether the First-tier Tribunal ("FTT") were wrong to hold that the appellants' "Spot the Ball" competitions ("STB") was exempt under the gaming exemption in Group 4 of Schedule 9 to the Value Added Tax Act 1994 (" VATA"), and the statutory provisions which VATA replaced. To fall within the gaming exemption, STB must be a "game of chance" within the meaning of the Gaming Act 1968 ("GA 68"), and the dispute is over the word "game" and (as a result of HMRC's respondent's notice) the words "of chance". The FTT had rejected the argument that there had to be what I will call an "inter-player interaction rule", i.e. a rule that a competitor has both to make a move and also to respond to another competitor's move or to a change of circumstance resulting from his move. It also held that STB was a game of chance. The UT found an error of law on the basis that inter-player interaction was classically required, and that its own assessment was that STB was not a "game." It did not therefore need to consider whether STB was a game "of chance." The appellants say that the UT was wrong to require a degree of inter-player participation: there is no hard and fast rule about that. Therefore there was no error of law entitling the UT to intervene.


For the detailed reasons given below, I agree that there is no hard and fast rule or presumption about inter-player participation in a "game" for GA 68 purposes and that the FTT made no error of law in holding that STB was a "game of chance". The appeal must therefore in my judgment succeed.



The appellants are a group of operators of STB (or successors in title to or assignees of, operators of STB) and the period in issue is from 23 April 1979 to 31 December 2006. STB was played by the operator producing a picture of a football game but with the ball, together sometimes with other features which might potentially assist in locating the ball, such as the facial expressions or orientation of spectators, blanked out. The competitor had to place a cross where he or she thought the ball was and return the coupon to the operator. There was no single set of rules applying to STB. A typical coupon would invite a participant to "use your skill and judgment to decide from all the information contained in the picture, the spot where you think the centre of the ball is most likely to be and indicate the spot by making a cross…."


The form of STB with which this appeal is concerned is called "panel STB". Although participants are instructed to guess the actual location of the missing ball, the rules generally made it clear that the winner would be decided not by reference to the actual position of the ball on the original photograph, but by reference to the opinion of the panel of experts as to which entry was most "skilful" or was closest to the panel's opinion of the most logical position of the ball. STB was presented to the public as involving skill and judgement and also involving elements of chance. The FTT held that FTT was a game "of chance" for GA 68 purposes.



During most of the relevant period, the VAT exemption for gaming was contained successively in Group 4, Schedule 5, Finance Act 1972, Group 4, Schedule 6, Value Added Tax Act 1983 and Group 4, Schedule 9 Value Added Tax Act 1994, which provided exemption from VAT for:

1. The provision of any facilities for the placing of bets or the playing of any games of chance.


From 1 November 2006, this was amended by the addition of the words "for a prize" at the end but nothing turns on this.


Until 31 October 2006 the successive provisions all defined "game of chance" for these purposes as having the same meaning as in the GA 68. The relevant provisions of GA 68 were in section 52:

(1) …."game of chance" does not include any athletic game or sport, but, with that exception, and subject to subsection (6) of this section, includes a game of chance and skill combined and a pretended game of chance or of chance and skill combined;…

(6) In determining for the purposes of this Act whether a game, which is played otherwise than against one or more other players, is a game of chance and skill combined, the possibility of superlative skill eliminating the element of chance shall be disregarded.


From 1 November 2006, the definition of "game of chance" was moved into the Notes to Group 4 of Schedule 9 to the Value Added Tax Act 1994. The new definition extended the exclusion of superlative skill to all games of chance, and not just those played against an operator or against a machine. Subject to that, the new provisions contained only immaterial differences to the definition in section 52(1), so I shall not set them out.



The FTT rejected HMRC's argument that a "game" required interaction between the players. The essence of the FTT's approach was that in the absence of any real guidance in the case law they had to approach "game" according to its ordinary meaning in the context of the GA 68. Dismissing case law which I will need to consider in detail below, the FTT held on these points:

79. Our analysis of the cases is as follows. First, we read Regional Pool Promotions and Armstrong as establishing little more than that some degree of active participation is inherent in the concept of a "game" (a proposition that both parties in this appeal agree upon, and a feature which they both agree is present in STB). Beyond that, the only principles we extract from them are (a) that the question of whether an activity amounts to a "game" or not is primarily a question of fact and (b) that there is no rule of law that requires an assembly of players in order to constitute a "game".

80. Turning specifically to Adcock, we consider it to be unpersuasive in the present case. The bingo players were all clearly playing in their local game of bingo. The question was whether there was also a national game involving all of them. It seems to us that the general observations made in both the High Court and the House of Lords about the nature of a "game" must be understood in the context they were made, that is to say a discussion about bingo. In a game of bingo, a crucial part of the game is the interaction with the caller and the other players, so it is not hard to understand why the view was taken that the absence of that interaction, together with the lack of any requirement to do anything more than participate in the normal way in the local game, should mean that there was clearly no national game.


At paragraph 97 of their decision, the FTT adopted the dictum of Lord Hailsham in News of the World Ltd v Friend [1973] 1 WLR 248, 254D that "in these cases the court will look at the realities of the offer and the competition and will not allow itself to be deceived, whether innocently or otherwise, by delusive appearances or descriptions." The FTT did not therefore confine their attention to the contractual documentation, and this is relevant to the respondent's notice.


At paragraph 111 of their decision, the FTT relied on the fact that section 52(6), which enabled single-player activities against an operator or machine to be a game, was enacted only in 1968. HMRC contend that this led the FTT to disregard the cases that were decided before 1968. I will call this "the section 52(6) point."


The principal reasoning of the FTT is to be found in the paragraphs of its Decision which follow:

112. If we find the cases unhelpful, we must fall back on general principles of construction.

113. Like many other words, the word "game" is a chameleon. It takes its colour from the context in which it is used. It has numerous "ordinary meanings", as highlighted by the entry from the Shorter Oxford English Dictionary which was put before us. Ignoring for a moment meanings which relate to wild animals pursued with guns or rods, it can mean "amusement, fun, sport", "amusement, diversion", "a diversion in the nature of a contest, played according to rules, and decided by superior skill, strength or good fortune".

114. We do not consider that an activity must involve more than one person in some kind of interaction before it can be a "game". It is normal, for example, to refer to a "game of patience", which activity involves only the player and a pack of cards. We discount as unduly artificial Mr MacNab's argument that this is because there is an element of "interaction" in such a game, namely an interaction between the player and the randomness of the cards.

115. In seeking to explore the boundaries of the concept of a "game", we also considered "puzzles" (involving the application of skill or logic to arrive at a single correct solution, such as in a crossword puzzle or Sudoku), "pastimes" (involving activities of many kinds whose main purpose is to spend time pleasurably) and "competitions" (in which a participant pits himself against another...

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