|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
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
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
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.
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
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
"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.
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.