The Upper Tribunal has allowed the taxpayer's appeal in Jumpman Gaming Ltd v HMRC, holding Remote Gaming Duty was not due on freeplays won from free to play promotional games. The decision provides important guidance on the interaction between ss159(4) and 159A FA 2014 and the taxation of free spins won through promotional gaming.
The Upper Tribunal has released its decision in Jumpman Gaming Ltd v HMRC [2026] UKUT 364 (TCC), a significant case concerning the Remote Gaming Duty (RGD) treatment of promotional free spins and other freeplay arrangements. The judgment will be welcomed by many remote gaming operators at a time when the sector is facing increased fiscal pressures, including the increase in the rate of Remote Gaming Duty to 40%.
The appeal arose from HMRC assessments totaling approximately £13.2 million in respect of accounting periods between July 2018 and December 2022. The dispute concerned the operation of Jumpman's "Welcome Offer", under which customers making a qualifying deposit received a free spin on the "Mega Reel". The Mega Reel could award a range of promotional prizes, including free spins on other games operated by Jumpman.
The statutory framework
The appeal focused on provisions introduced by the Finance (No. 2) Act 2017 into the RGD regime contained in Chapter 3 Part 3 Finance Act 2014.
Section 159(4) broadly deems participation in gaming pursuant to certain freeplay offers to involve a gaming payment for RGD purposes. Section 159A contains exclusions intended to prevent particular forms of subsequent participation from generating further gaming payments.
The FTT had accepted HMRC's position, concluding that:
- participation in the initial Welcome Mega Reel spin did not fall within s159(4); and
- free spins subsequently won from the Mega Reel did not qualify for the exclusion in ss159A(4) and (5).
Ground 1: HMRC succeeds
Jumpman argued that the FTT had erred in concluding that the Welcome Mega Reel spin was participation in a "free game" rather than participation in a game played for free.
The Upper Tribunal rejected that challenge. It held that the FTT had been entitled to conclude, on the evidence before it, that the Welcome Mega Reel spin did not involve the waiver of an amount otherwise payable by the customer. In particular, the Tribunal held that the occasional availability of paid Mega Reel promotions did not require the FTT to conclude that participation in the Welcome Offer involved the waiver of a gaming payment. The Tribunal therefore upheld the FTT's conclusion that participation in the Welcome Offer itself was not participation pursuant to an offer waiving a gaming payment for the purposes of s159(4).
Grounds 2 and 3: Jumpman succeeds
However, the taxpayer succeeded on the more significant issues concerning statutory interpretation.
On Ground 2, the Upper Tribunal held that the FTT had erred by excluding consultation materials generated during the legislative process leading to the 2017 amendments. The Tribunal confirmed that such materials may form part of the relevant legislative background when interpreting legislation.
The substantive dispute was addressed under Ground 3. The key issue was the meaning of the expression "the gaming" in s159A(4)(b) FA 2014.
HMRC argued that the phrase referred only to gaming undertaken pursuant to an earlier waived-payment freeplay offer. Jumpman contended that it referred more broadly to remote gaming generally.
The Upper Tribunal carefully considered the statutory language, the wider legislative scheme, explanatory notes and consultation materials, weighing the support each provided to the parties' respective arguments. In a finely balanced but clearly reasoned decision, the Upper Tribunal ultimately preferred Jumpman's interpretation. It concluded that "the gaming" in s159A(4)(b) refers to the remote gaming identified in the subsection and is not confined to gaming undertaken pursuant to an offer waiving payment.
The result
The Tribunal held that the FTT's interpretation of s159A(4)(b) was erroneous. On the correct interpretation, the further free spins awarded through the promotional process fell within the statutory exclusion in ss159A(4) and (5) and no RGD liability arose.
Practical implications
The decision has immediate implications across the remote gaming sector. Online casino operators have adopted differing approaches to the RGD treatment of promotional free spins, with some accounting for RGD and others not doing so. HMRC has been actively auditing major operators to ascertain the extent of exposure.
Some businesses will have reflected potential retrospective exposure through provisions, contingent liabilities and uncertain tax positions, while others will have accounted for historic RGD in accordance with the First-tier Tribunal's interpretation and may now have grounds to pursue repayment claims.
Given the differing approaches adopted across the sector since the First-tier Tribunal's decision, operators should now review historic positions as a matter of priority, both from a risk management perspective and to identify opportunities for retrospective claims.
Following the Upper Tribunal's decision, operators should review:
- existing tax provisions and contingent liabilities linked to historical RGD treatment;
- uncertain tax positions and related governance assessments;
- open enquiries, assessments and disputes involving promotional freeplay arrangements; and
- the potential availability of retrospective repayment claims where RGD has been accounted for on a basis that is inconsistent with the Upper Tribunal's interpretation of s159A FA 2014.
What happens next?
Given the financial significance of this issue, both in this appeal and more widely across the sector, this decision is unlikely to represent the final chapter in the debate over the RGD treatment of promotional freeplay arrangements. The Upper Tribunal's decision resulted in assessments of approximately £13.2 million being reduced to nil and may have implications far beyond the facts of this case.
It remains to be seen whether HMRC will seek permission to appeal. If the decision stands, HMRC may instead look to legislative change to achieve the outcome it unsuccessfully argued for before the Tribunal. The consultation materials discussed in the judgment demonstrate that the policy treatment of promotional freeplay has long been an area of interest for Government and HMRC.
To discuss the implications of the decision for historic RGD positions, provisions, uncertain tax positions or potential repayment claims, please contact us.
The Upper Tribunal’s decision can be accessed here.