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 Sean Farrell |
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| New rules and
penalties take aim at gambling operators that base themselves outside the UK
but target British customers The government has announced a £300m clampdown on tax avoidance by gambling operators that base themselves outside the UK but target British customers. New rules and penalties are designed to make sure gaming companies with British gamblers pay taxes to the Treasury from next year, wherever they are based. The change will affect some of gambling's biggest names. Ladbrokes, Bwin.party, William Hill and Betfair all have online operations based in Gibraltar, where taxes are levied at 1% and capped at £425,000. Failure to comply could land offenders with a prison sentence of up to seven years. It means that from 1 December 2014, all offshore gambling companies will be taxed on their gambling profits from UK customers. They will be liable to pay remote gaming duty, general betting duty or pool betting duty, all of which are 15%. The UK remote gambling market is worth more than £2bn a year, according to the Gambling Commission. The Treasury said the rule changes would bring in about £300m a year in extra tax revenues. Sajid Javid, economic secretary to the Treasury, said: "It is unacceptable that gambling companies can avoid UK taxes by moving offshore, and the government is taking decisive action to ensure this can no longer happen in the future. These reforms will ensure that remote gambling operators who have UK customers make a fair contribution to the public finances." The rise of the internet has allowed gaming companies to set themselves up in tax havens to avoid taxes while selling services to customers in Britain and other countries. The Treasury said the changes would allow all gambling companies that do business in the UK to compete equally. William Hill, Britain's biggest remote gambling operator, said it was considering how to respond, including the option of contesting the changes on the grounds that they breach European Union competition law. The Treasury promised tough enforcement measures for the rules, including new criminal offences. Failure to comply will risk prison sentences, unlimited fines, or the loss of a remote gambling operator's licence to do business in Britain. The changes follow last year's announcement that the government would tax gambling on the "place of consumption" – where the customer is located – instead of the "place of supply" – where the company is based. The result is that remote gambling by customers in Britain, usually carried out online or on the telephone, will be taxed in the UK. "We knew it was coming. The focus for us now is on trying to get the actual rate of the tax reduced," Clive Hawkswood, chief executive of the Remote Gambling Association industry lobby, told Reuters. Offshore gaming companies based in Gibraltar have been a source of tension between the UK and Spain, fuelling the current dispute over border controls for the island. Plans to bring offshore gaming companies under the British tax system were set out in the government's 2012 Budget but the industry had been waiting for details, including the rate of tax. The changes were drawn up after a period of consultation with the industry and other groups including the Gibraltar government and the Salvation Army. |
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