The UK Chancellor Gordon Brown has responded to the recent exodus of UK betting companies to offshore jurisdictions by hinting that he will use his upcoming March budget to close down the legal loopholes that have allowed this.
In a statement last week, a UK Treasury spokeperson said: 'We are disappointed by the number of bookmakers using offshore centres and we take this threat to the revenue very seriously. We said no option had been ruled out for maintaining that. We will consider what additional measures we can bring forward to curb this. We are looking very seriously at this issue.'
Mr Brown has already hinted in his November pre-budget statement that the Government is prepared to legislate to protect its base of revenue from the UK's betting levy, and recently introduced regulations to restrict the advertising of offshore betting in the UK, although to little effect.
The driving force behind the recent spate of relocations of telephone and internet betting services to tax free Gibraltar, Alderney and most recently Antigua via Ireland has been the desire to avoid the UK's 9% betting tax. It is believed that the Treasury expects to lose over £50 million in betting tax this year and is extremely concerned that further growth in offshore betting will make these losses substantially worse.
The UK betting industry has been calling on the Government for some time now to reduce the betting tax to a more realistic level (3% has been suggested), but has clearly lost patience with Chancellor Brown, who now faces some difficult decisions as reality sets in. If the Chancellor takes a hard line approach in the Budget, he may force the major players in the UK betting industry to quit the UK altogether. Despite last week's warning, a realistic assessment of the issue should force Gordon Brown to listen to the industry and seek a compromise solution. However, whether the stubborn UK Chancellor (or Treasury) will do this before it becomes too late remains open to question.
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