Judgment summary
This is an appeal from a decision of the First-tier Tribunal (Tax Chamber) in Jumpman Gaming Ltd v HMRC [2025] UKFTT 1117 (TC) (1). Jumpman operated online gaming platforms and offered a 'Welcome Offer' under which customers received a free spin of the 'Mega Reel', a game of chance that could award further free spins on other games (2). HMRC assessed Jumpman to approximately £13.2 million of Remote Gaming Duty for accounting periods between 1 July 2018 and 31 December 2022 (3).
The appeal concerned the interpretation of s159(4) and s159A of the Finance Act 2014, provisions introduced by the Finance (No. 2) Act 2017 dealing with promotional freeplays for Remote Gaming Duty purposes (4). The FTT had accepted HMRC's interpretation and dismissed the appeal, finding that the Welcome MR Spin did not fall within s159(4) and that Further Free Spins did not qualify for exclusion under s159A(4) and (5) (4).
Jumpman appealed on three grounds: Ground 1 concerned the FTT's application of s159(4) to the Welcome MR Spin; Ground 2 concerned the FTT's refusal to consider 2016 consultation materials; and Ground 3 concerned the FTT's interpretation of 'the gaming' in s159A(4)(b) (36).
The Upper Tribunal dismissed Ground 1, holding that the FTT's evaluative conclusion that the Welcome MR Spin was a free game rather than a game played for free was reasonably open to it on the evidence (81)-(83). It allowed Ground 2, holding that the FTT erred in excluding consultation materials as inadmissible (89). It allowed Ground 3, concluding that 'the gaming' in s159A(4)(b) refers to remote gaming generally rather than being confined to gaming undertaken pursuant to an offer waiving payment (176)-(178).
As a consequence, the Tribunal found that the Further Free Spins fell within the statutory exclusion in s159A and did not give rise to RGD liability, while the FTT's conclusion on the Welcome Offer itself stood undisturbed (180)-(181). The assessments made under s12 Finance Act 1994 read with s167 FA 2014 were reduced to nil pursuant to s16(5) Finance Act 1994 (182).
Background
Jumpman operated online gambling platforms through which customers participated in remote games of chance, and could win cash, bonus credits or free spins entitling them to further games (26). The Welcome Offer entitled a customer who opened an account and made a qualifying deposit to a free spin on the Mega Reel, referred to as the Welcome MR Spin (27).
The Mega Reel was a game of chance presented via a pop-up box, with configurable prizes including free spins on games such as Fluffy Favourites, King Kong Cash and Chilli Heat, cash prizes, Amazon vouchers, 'spin again' outcomes and 'unlucky' outcomes (28)-(29). A customer who won free spins on another game from the Mega Reel could use those spins to play that game without further payment at that stage, referred to in the decision as 'Further Free Spins' (29)-(30).
RGD is imposed by Chapter 3 of Part 3 of the Finance Act 2014 and taxes a remote gaming provider by reference to profits from remote gaming, calculated from gaming payments received less deductible prizes (6)-(8). The Finance (No. 2) Act 2017 introduced s159(4) and s159A FA 2014 to address the treatment of promotional freeplays, following a 2016 HMRC consultation entitled 'Tax treatment of freeplays in Remote Gaming Duty' (10)-(16).
Core dispute
The dispute concerned, first, whether participation in the Welcome MR Spin was participation 'in reliance on an offer which waives all of a gaming payment' within s159(4)(a) FA 2014, or instead participation in a free game to which no gaming payment attached (37)-(38).
Secondly, the dispute concerned the meaning of 'the gaming' in s159A(4)(b): whether it referred to remote gaming generally (Jumpman's position) or only to gaming undertaken pursuant to an offer waiving all or part of a gaming payment as described in s159A(4)(a) (HMRC's position) (92)-(93).
A further, related issue (Ground 2) concerned whether the FTT had been entitled to exclude from consideration the 2016 HMRC consultation materials and Government response preceding the Finance (No. 2) Act 2017 amendments (84)-(89).
Court findings
On Ground 1, the Upper Tribunal held that the challenge was, in substance, an Edwards v Bairstow-type challenge to the FTT's evaluative findings, and confined its consideration to the criticisms of the FTT's treatment of the evidence rather than a broader challenge to the FTT's interpretation of s159(4), which fell outside the pleaded ground (43)-(46). The Tribunal found that the FTT was entitled to conclude, on the evidence including the displayed spin value, the accounting entries and the occasional existence of paid Mega Reel versions, that participation in the Welcome MR Spin was participation in a free game rather than a game played for free, and that this conclusion was reasonably open to it (56)-(83).
On Ground 2, the Tribunal held that the FTT erred in excluding the 2016 consultation materials as inadmissible aids to construction, since such materials may properly illuminate the legislative background and mischief even though not themselves before Parliament (85)-(89).
On Ground 3, the Tribunal undertook a detailed analysis of the statutory text, the use of 'the gaming' elsewhere in Chapter 3, the structure of s159A, the heading to s159A, worked examples concerning mixed chains of freeplay and non-withdrawable winnings, the Explanatory Notes and the consultation materials (97)-(174). It concluded that the natural and preferable reading of 'the gaming' in s159A(4)(b) refers to the remote gaming identified at the start of s159A(4), and is not confined to gaming undertaken pursuant to an offer waiving payment as in s159A(4)(a) (175)-(176). The Tribunal held that HMRC's interpretation required the phrase 'in the course of' to bear an unnaturally broad tracing function through potentially many intervening transactions, which did not emerge naturally from the statutory language (170)-(171).
Outcome
Ground 1 was dismissed. Grounds 2 and 3 were allowed (179). The FTT's conclusion that the Further Free Spins gave rise to gaming payments under s159(4) was found to depend on an erroneous interpretation of s159A(4)(b), and on the correct interpretation the Further Free Spins fell within the statutory exclusion and did not give rise to RGD liability (180).
Because Ground 1 was dismissed, the FTT's conclusion that no liability arose in respect of the Welcome Offer itself remained undisturbed (181). The Upper Tribunal set aside the FTT's decision to the extent identified and remade it, concluding that no liability to Remote Gaming Duty arose in respect of either category of participation forming the basis of the assessments under appeal (181)-(182).
The assessments, made under s12 Finance Act 1994 read together with s167 FA 2014, were reduced to nil pursuant to s16(5) Finance Act 1994 (182).
Major issues / areas of contention
- Whether participation in the Welcome MR Spin fell within s159(4) FA 2014 as participation in reliance on an offer waiving a gaming payment, or was instead participation in a free game outside that provision.
- Whether the FTT erred in law, applying an Edwards v Bairstow standard, in its evaluative conclusions on the spin value, accounting entries and existence of paid Mega Reel versions.
- Whether the FTT was entitled to exclude the 2016 HMRC consultation materials and Government response as inadmissible aids to statutory construction.
- Whether the expression 'the gaming' in s159A(4)(b) FA 2014 refers to remote gaming generally or only to gaming undertaken pursuant to an offer waiving a gaming payment as described in s159A(4)(a).
- The proper approach to worked examples of mixed chains of freeplay and non-withdrawable winnings in construing the phrase 'in the course of the person's participation in the gaming'.
- The relevance and weight to be given to the heading of s159A and the Explanatory Notes accompanying the Finance (No. 2) Act 2017.