Reclaiming VAT guide

During your lottery operations, you may be able to reclaim your VAT

The following content in this section is for the purpose of providing guidance on reclaiming the VAT from your lottery, freeing up money that can be used to market your lottery and help it grow. 

VAT reclaim is only applicable where partial exemption applies: A business is partly exempt if it makes, or intends to make, both taxable and exempt supplies and incurs tax on costs which relate to both. Section 11 in this notice relates to the de minimis rule, which is where VAT recovery may be available. 

Key guidance if you are NOT a local authority can be found HERE, this outlines the £625 per month AND not more than 50% of input tax incurred rule

Key guidance if you ARE a local authority can be found HERE, this outlines the greater of £625 per month / not exceeding 5% of total input tax incurred rule

PLEASE NOTE - The content on this page is provided for general information purposes only and is not intended to be tax advice applicable to any specific operator. If an operator is unsure whether any of the referenced guidance applies to them, then they should seek specialist tax advice. Gatherwell does not accept liability to any operator which places reliance on the information provided on this page. Operators are responsible for managing their own tax affairs and seeking specialist tax advice where appropriate.

Gatherwell is a VAT registered company (GB195014806) and is required to charge standard rated VAT for its services. Please reference section 5 in the https://www.gov.uk/guidance/how-vat-applies-to-betting-gaming-and-lotteries-notice-70129 HMRC advice notice.

A service charge on all Gatherwell lotteries is factored into the ticket price. Currently,  lotteries run by Gatherwell have a range of service fees; 16.67p - 18.17p, therefore  £1 tickets include 3.33p - 3.63p of VAT (this is the standard 20% VAT rate on the service fee). The remaining 80p - 78.2p from each ticket (for prizes and good causes) is not subject to VAT.

We are aware of the following steps operators have taken, and this approach may be suitable for you.

How to account for the VAT?
Different operators have chosen to account for VAT in different ways. Whichever method is used, we provide the information you need to recover the VAT.

1. Go to ‘Payments’ tab on the lottery dashboard (you’ll need to have the correct permissions for this to be visible)

2. On the right hand side, under ‘Actions’ click on the ‘Review’ link for the payment period you wish to reclaim.
3. Click the ‘Download Operator Invoice’ PDF – you will need the figures from this invoice to reclaim the VAT amount.

Option 1 – simple recovery for VAT only
Debit your VAT account (input tax) with the value of the VAT shown in the right hand
column on the invoice, this enables you to include and recover it on your VAT return. You can then credit your lottery cost code.

Option 2 – recovery for VAT & grossing up for prizes
Some operators  have chosen, for transparency, to account for the prize element of the £1 in their internal systems.

The following stages are required on your systems:
1. Credit the ticket sales code (e.g 40% of ticket sales*)
2. Debit the VAT input tax account (VAT Amount)
3. Debit the Management fee cost code (Service Charge Amount)
4. Debit the Prizes cost code (e.g 20% or 18..2% of total revenue*)
5. The total invoice then needs netting down to a nil payment, as all payments due are already recovered directly by Gatherwell.

These stages not only recover the VAT but also make sure all costs and income are accounted for correctly. - NB The reporting of money paid to good causes is captured separately on the lottery website so isn’t included on internal systems

Option 3 – recovery for VAT & grossing up for prizes & good causes
Some authorities have chosen for transparency to account for both the prizes and good cause element of the £1 in their internal systems. The following stages are then required on your systems:

1. Credit the ticket sales code (100% of ticket sales)
2. Debit the VAT input tax account (VAT Amount)
3. Debit the Management fee cost code (Service Charge Amount)
4. Debit the Prizes cost code (e.g 20% or 18.2% of total revenue*)
5. Debit the Good Cause cost code (e.g 60% of total revenue*)
6. The total invoice then needs netting down to a nil payment, as all payments due are already recovered directly by Gatherwell.
These stages not only recover the VAT but also make sure all costs and income are accounted for entirely on the internal systems.

*These values are dependent on the model adopted. The split of the £1 is detailed in your lottery agreement.