The home of intelligent horse racing discussion
The home of intelligent horse racing discussion

Gambling tax regime at ‘point of consumption’…

Home Forums Horse Racing Gambling tax regime at ‘point of consumption’…

Viewing 16 posts - 1 through 16 (of 16 total)
  • Author
    Posts
  • #21327
    betlarge
    Participant
    • Total Posts 2789

    Looks like an excellent idea from the Chancellor to make going offshore pointless.

    Are there any loopholes in this?

    (From the RP):
    CHANCELLOR George Osborne on Wednesday confirmed a change in policy over online betting, which is to be taxed at the point of consumption and not the point of supply, as at present, with the intention of capturing duty from offshore operators taking bets from UK-based punters.

    Delivering the Budget in the House of Commons, Osbornesaid: “The current duty regime for remote gambling introduced by the last government was levied on a ‘place of supply’ basis. This allowed overseas operators to largely avoid it, and much of the industry has, as result, moved offshore.

    “Ninety per cent of online gambling consumed by our citizens is now supplied from outside the UK, and the remaining UK operations are under pressure to leave.

    “This is clearly not fair, and not a sensible way to support jobs in Britain. So we intend to introduce a tax regime based on the place of consumption, where the customer is based, not the company.”

    The Treasury is expected to begin a consultation period shortly, which will lead to the rate of duty being announced in either the autumn financial statement or next year’s Budget.

    Osborne has also set the new duty that will apply to machines played in betting shops at 20 per cent of net takings, higher than betting industry studies had suggested would match the government’s pledge for a revenue neutral position.

    The rate for machines games duty, which replaces both amusement machine licence duty and the VAT previously paid by betting-shop operators, wasset out in the Budget on Wednesday and came into effect when a series of motions was passed in the House of Commons.

    Osborne told the House: “The VAT treatment of gaming machines is being repeatedly challenged by operators in thecourts. So I will introduce a new machine games duty, with a standard rate of 20 per cent and a lower rate for low stakes and prize machines of five per cent of net takings.”

    Osborne also announced that from next month the government would introduce double taxation relief for remote gambling.

    He said: “These changes will create a more level playing field, and protect jobs here.”

    Mike

    #397955
    Cav
    Participant
    • Total Posts 4823

    Don’t see how this effects revenue streams into Racing. In any event I’m sure Coral’s had wind of this before their re-location announcement. They don’t seem too bothered.

    #397959
    wit
    Participant
    • Total Posts 2164

    Although the "point of consumption" regime has not yet been drafted (the Chancellor saying the Treasury is only starting consultation shortly) , one aspect of it is already decided and going into effect from the end of this month.

    HMRC has announced that the UK will apply double tax relief in respect of gambling duty for accounting periods ending after 31 March 2012:

    http://www.hmrc.gov.uk/tiin/tiin728.htm

    In other words the UK won’t charge gambling duty to the extent that a UK operator already pays " qualifying taxes on the same transactions in other countries."

    To that extent it seems already an "after you, Claude" recognition of the primacy of the gambling duties of the country in which the racing takes place. And/or a third country in which another counterparty to the transaction may be based.

    Normally double tax relief only operates where a country has a double tax treaty with the UK that addresses the tax in question – in the racing context, General Betting Duty.

    There is a list here of the UK’s existing double tax treaties:

    http://www.hmrc.gov.uk/taxtreaties/in-force/index.htm

    Some significant racing countries aren’t on that list (eg UAE), and many countries which are don’t currently have any reference in their treaty to a similar (or even any) gambling duty.

    Be interesting to see then how this works out, since typically it takes years to negotiate changes to double tax treaties. Double-charging until then, or will the UK allow a longer lead-in period than next autumn / spring ?

    Will also be interesting to see if and how this change to the basis of General Betting Duty impacts the hitherto similarly-assessed Levy. It could be the breaking point for a statutory charge that UK governments have not been very keen to remain involved in.

    #397965
    betlarge
    Participant
    • Total Posts 2789

    Don’t see how this effects revenue streams into Racing. In any event I’m sure Coral’s had wind of this before their re-location announcement. They don’t seem too bothered.

    Well they’ve just released a statement saying they are "digesting the Chacellor’s statement" so it’s clearly given them

    something

    to think about.

    My other thought would be that if companies do return to the UK, then any proposed replacement for the Levy could be more workable.

    Mike

    #397971
    Drone
    Participant
    • Total Posts 5505

    Well spotted George and observers, and I think all UK residents should applaud their ‘closing of this loophole’ as it will contribute a significant sum to tax receipts…in theory

    But like CR, I don’t see how this additional revenue stream will benefit Racing, unless a percentage of that stream has been earmarked for some sort of ‘son of Levy’

    :?

    #397972
    betlarge
    Participant
    • Total Posts 2789

    But like CR, I don’t see how this additional revenue stream will benefit Racing, unless a percentage of that stream has been earmarked for some sort of ‘son of Levy’?

    Well that was sort of what I was thinking. If ‘Son Of Levy’ is mooted as being drawn from this source it makes it impossible to legally avoid/negotiate down.

    Mind, even if this just goes to the public purse that will do for me.

    Mike

    #397979
    Cav
    Participant
    • Total Posts 4823

    The Tory line on the funding of Racing consistently contains the words "commercially viable alternative" (to the present levy), so I don’t see a funding model based on government tax take being likely anytime soon.

    Besides what would make Racing a special case when it came to rebate time, when this offshore duty would be applied to all sports betting, I presume.

    The bookmakers are primarily offshore to avoid 15% on profits not levy payment. Why not scrap that and bring them back onshore? The initial loss would probably be offset by jobs and service payments over the longer term plus you’d have the levy yield back onshore as well.

    Highly taxed betting companies operate at a massive commercial disadvantage these days, particularly in the big growth markets of football and tennis. Threats to tax them more will bear no fruit imo.

    No brainer for Coral to go-offshore in the present climate. 1.01 they wont be revising their plans for Gibraltar (or wherever).

    #397987
    Black Sam Bellamy
    Participant
    • Total Posts 442

    I am sure Gibralter will be looking at ways of keeping these firms on their premises. Reductions in business tax rates for example.

    #397997
    % MAN
    Participant
    • Total Posts 5104

    Meaningless words from the Chancellor – I cannot see how this proposal could be properly enforced and it would be easily circumventable for the bookmakers if they so wished.

    They will still be able to "minimise" the payments even if this "point of consumption" plan is invoked – the review process will be very interesting.

    I would not be surprised if the proposal quietly disappeared.

    #398007
    Kenh
    Participant
    • Total Posts 741

    If the government are serious about this I applaud them and it’s not often I will say that about the Tories. I do though think the biggest issue about offshore gambling companies is the regualtion of them when they are based abroad but sell their product here. We have seen how this affects people in the Barney Curley affair and also in the poker world.

    #398008
    robert99
    Participant
    • Total Posts 899

    I am sure Gibralter will be looking at ways of keeping these firms on their premises. Reductions in business tax rates for example.

    The EU has stopped that by harmonisation "tax haven" rates in January 2011. Gibraltar rate went from 1% to 10%. The main reason they stay ashore is to avoid the Levy and the UK Gambling Act which makes bets enforceable in law.

    The UK cannot act alone on this. It is an adverse effect of globalisation/ internet and needs international cooperation, enforcement and legal agreement. Te EU may also simply rule it as a barrier to trade from other EU countries into the UK.

    #398012
    wit
    Participant
    • Total Posts 2164

    ……… The main reason they stay ashore is to avoid the Levy and the UK Gambling Act which makes bets enforceable in law.

    credit where its due though: not every UK bookie in Gib is looking to deprive the UK punter of the protection of the UK Gambling Act.

    its true that if you back a horse with Ladbrokes in Gib, your rights are governed by Gib law and have to be pursued through the Gib courts.

    however if you back a horse with William Hill in Gib, their terms and conditions expressly provide that your rights are governed by English/Welsh law and are to be pursued through the English/Welsh courts.

    always worth checking the last few clauses of your bookie’s terms and conditions for "governing law and jurisdiction" to see how punter-friendly they are on this point.

    #398044
    robert99
    Participant
    • Total Posts 899

    Wit,

    Fair play to WH.
    Though the number of people betting who even know there are terms and conditions let alone what they mean must be minuscule.
    Even fewer do not realise there are many WHs when they think they are simply betting with William Hill who have shops down the road. UK solicitors also seem totally baffled as to what to advise.

    Legality is not so clear cut as the Gambling Commission in Gibraltar also say they will incorporate UK Gambling law but in reality have not. That became very clear for the Barney Curley payout. WH terms also has the confusing term "non-exclusive jurisdiction" for England and Wales courts and even then that "protection" is restricted to terms of use disputes. So they suit themselves which Court jurisdiction for which dispute?

    It is not clear, for example, that the threat of the UK Small Claims Courts can be used to get paid out for legitimate offshore bets for palpable error scams they try out with the agreement of Gibraltar GC licencing. Then again Malta terms differ from Gibraltar betting terms. Scotland and N Ireland bettors are not covered at all?

    WH Terms

    "32. LAW AND JURISDICTION

    32.1 If You are gaming with William Hill (Malta) Limited the Terms of Use shall be governed by and interpreted in accordance with the laws of Malta.

    32.2 If You are gaming with WHG (International) Limited or WHG Trading Limited the Terms of Use shall be governed by and interpreted in accordance with the laws of England and Wales.

    32.3 The courts of England and Wales shall have non-exclusive jurisdiction over any disputes arising out of the Terms of Use"

    #398045
    Eclipse First
    Member
    • Total Posts 1569

    Of course these legal arguments do not matter as long as you can keep backing losers! :D

    #398108
    wit
    Participant
    • Total Posts 2164

    Hi Robert

    "non-exclusive jurisdiction" is a standard formulation.

    It means that if either the punter or Hills starts legal action against the other in an English court, then the other of them won’t raise any objections to using the English court. In other words, whichever of them is the defendant will not argue the English court is not a proper venue to hear the dispute.

    At the same time it also does not exclude the punter or Hills starting legal action against each other in another court outside England – but in that event whichever of them is the defendant can argue that such outside court is not a proper venue.

    So it amounts to each of the punter or Hills being guaranteed a hearing in an English court when one of them wants that, while leaving each of them free to try their luck with an outside court.

    One reason for having parallel proceedings in an outside court might be if the defending party had assets outside the immediate direct reach of the English court, which the pursuing party wanted to freeze to make sure they were still around to enforce against when the underlying dispute was adjudged in the English court.

    Punters in Scotland / NI (and any other country in the world) are all in the same position as punters in England – the point of the clause is to guarantee that a hearing can be had in one of the prime international legal forums, which to date in the English-speaking world typically means England /Wales or New York (others being more arbitration than court venues).

    As regards Barney, Hills apparently readily paid him out – a quick google yielded this extract from the CEO’s blog, which also seems to explain (albeit in marketing terms) the thinking behind their English jurisdiction / English governing law :

    =============
    One blog reader has asked for my view on the Barney Curley case, which is not reflecting well on some elements of the betting industry at the moment.

    Whatever the moral arguments about Curley’s approach, the fact is these were legal bets and should be paid out. There was no cheating. The BHA has ruled horses ran according to official rating as all other horses do. There was no reason to disqualify the runners and so no reason not to pay out.

    Thanks to the vigilance of our team of traders who picked up possible patterns the day before, we weren’t hit hard. We paid out immediately and without hesitation on all those bets. There was never any question in our minds.

    The idea that a licensed bookmaker could consider treating high street and online UK customers differently isn’t just a slippery slope, it’s positively precipitous. The UK leads the way in having the most advanced and successful regulatory regime in the world.

    In serving our online customers from Gibraltar, we still live up to the same high standards expected of our land-based betting customers in the UK. More than 50% of our online customers walk into our shops anyway. Our customers have the right to expect equal treatment whether online, in the shops, on their mobiles or on the telephone. With William Hill, they get it
    ==============

    http://www.ralphtopping.com/the-barney-curley-case/

    by contrast, Betfair go non-exclusive jurisdiction in Gib (for UK-based online punters), while Ladbrokes goes even further with exclusive jurisdiction in Gib.

    so Betfair does not guarantee a hearing locally in the UK, while Ladbrokes totally rules it out even as a possibility.

    #398151
    robert99
    Participant
    • Total Posts 899

    Hi Wit,

    An education – thank you.

    In essence, without your advice or similar it is unlikely any punter in UK would fully understand the implication of the terms and conditions he was betting under, even if he had read them.

    William Hill’s statement on customer service integrity should be widely applauded and harps back to the day when businesses had leaders, rather than PR departments spouting platitudes. That the rest have avoided not only tax, levy but UK customer protection should hopefully make people consider more who they bet with when there is a choice.

    Robert

Viewing 16 posts - 1 through 16 (of 16 total)
  • You must be logged in to reply to this topic.