Following the intensive lobbying campaign organised by BALPPA which culminated with a delegation of members and MP's meeting with Chloe Smith MP, Secretary to the Treasury, just days before the final decision on the design of MGD, the Government this week announced that MGD will be implemented on 1 February 2013.

In the announcement it has been confirmed, following the evidence provided by BALPPA, that an adjustment to exclude machines that only give out non-monetary (non-cash) prizes such as cranes, redemption machines and novelty prize machines had been secured. This follows from the extensive work that BALPPA has carried out over the last year to demonstrate the impact of the new tax on the fragile seaside and attractions industries.

We will continue the fight for relief of the non-reclaimable VAT so unfairly brought about by the introduction of this tax.

Design characteristics of MGD:

Key changes to the design of MGD following the consultation with BALPPA include:

- Only including machines with cash prizes in MGD (this means that for example redemption machines and crane grabs which only offer non-cash prizes will remain outside the scope of MGD);

- Changing the treatment of free plays, so that these are treated in line with the stakes actually payable (except where specific anti-avoidance provisions apply);

- No longer requiring records to be kept per machine as standard; and

- Introducing a paper channel for filing returns, while maintaining the option to file online.

The announcement confirms there will be two rates of MGD. The lower rate will apply to machines with maximum stakes of 10 pence and maximum cash prizes of £8. This will ensure that all category D machines that will be subject to MGD, but which currently do not pay AMLD, pay the lower rate of MGD. The rates will be determined as part of the normal budget process for announcement in March 2012.

The actual confirmed rates are critical to how this tax impacts our members, BALPPA having proposed that the lower rate in particular should be at a level that will be tax neutral at worst (for pushers and low stake and prize fruit machines that will still be caught by MGD).

The Treasury have acknowledged BALPPA's consultation response, the site visits we organised and the data we provided through our PWC report was of key assistance in their decision making, with BALPPA continuing to present our members concerns over VAT on property and turnover rents

HMRC will be establishing an implementation group of stakeholders that will manage the transition from AMLD and to prepare fully for the implementation of Machine Games Duty at which BALPPA will continue to represent our member's interests.