Omaze vs HMRC: The VAT Tribunal That Could Change Competition Ticket Prices

Omaze, the UK's best-known house draw operator, has taken HMRC to court. Its appeal was heard by the First-tier Tax Tribunal in mid-October 2026, and a decision is expected in spring 2027. The question is whether paid entries to prize draws should carry 20% VAT.

It sounds like a dry tax dispute between a company and the taxman. It is actually the most important open question in the UK competition market, and how it is decided will feed through to ticket prices and pool sizes on almost every site you use.

What the Case Is About

HMRC's position is that a prize draw offering both a paid and a free route of entry does not qualify for the VAT exemption that applies to lotteries, so the paid entries are standard-rated. That view was confirmed in Parliament on 17 February 2026 by the then Exchequer Secretary to the Treasury, Dan Tomlinson, and HMRC has since sent “nudge” letters across the sector asking operators to review how they account for VAT.

Omaze is appealing against that position. According to City AM's report of the hearing, the company says it has been paying VAT in the UK since 2021 and is one of only a few prize draw operators doing so. It argues that this is unfair, and it wants clarity and a level playing field across the sector. Omaze says it has raised more than £150 million for UK charities.

Why Omaze Is Arguing This

The interesting part is that Omaze is not just asking to pay less tax. It is pointing out that it already pays VAT while many competitors, in its view, do not. That leaves two ways for the playing field to be levelled:

• Omaze wins. If the tribunal decides paid prize draw entries are exempt, Omaze could stop charging VAT and may be able to reclaim what it has paid. The rest of the sector would be off the hook, and HMRC's letter campaign would lose most of its force.
• HMRC wins. If HMRC's view is upheld, there is a tribunal ruling behind it, not just a ministerial answer. Every operator that has not been charging VAT would be exposed, potentially including assessments for earlier periods, which tax advisers have flagged as a real risk.

Either outcome gives Omaze the level field it says it wants. Only one of them is good news for the rest of the market.

Why This Matters for Your Tickets

We explained the mechanics in August in HMRC is writing to competition sites about VAT. In short, an operator hit with 20% VAT has three options, and they all cost entrants: put the ticket price up, sell more tickets against the same prize, or shrink the prize.

Across the 2,463 live draws we track today from 111 operators, the median Value Ratio is 2.50: operators collect about £2.50 for every £1 of prize value. If VAT were passed straight through, that median would move to roughly 3.00. In plain terms, the median 99p ticket would become about £1.19, or the pool you are entering would quietly get a fifth bigger.

Smaller operators are the most exposed. Trade figures in the industry have warned that VAT would hit small and mid-sized sites hardest, and backdated bills are the bigger danger for a business that has never charged VAT. A sudden tax bill is exactly the kind of thing that leads to extended draws, smaller prizes or a site closing.

What It Does Not Change

• Your winnings stay tax-free. This is about VAT on what operators sell, not tax on what you win. See our guide to tax on competition wins.
• Free entry routes stay. The free route is what keeps prize draws outside the Gambling Act, which we explain in is a prize draw gambling? Nothing in this case changes that.
• Nothing is decided yet. Until the tribunal rules, HMRC's view is HMRC's view, and either side can appeal further.

What to Watch Between Now and Spring

Price rises are easy to spot. Bigger pools are not. A comp that sold 5,000 tickets last month and is selling 6,000 this month looks identical on the page, and most people never check. That is why we log pool size and value, not just price.

Omaze itself has made one visible change this autumn: the £250,000 that comes with its houses is now paid in instalments rather than a lump sum. We cover that in Omaze's £250,000 instalments explained.

The practical answer is the same as it always is. The gap between the best and worst value on any given day is far wider than 20%, so which comp you pick still matters more than what VAT does to the average. Check the live rankings on the best odds league table and run anything you are about to buy through the odds calculator first.