UK Denies Rumours Of Tax On Betting Profits As Offshore Bookmakers Mull Forthcoming Budget

Mandy Robinson, Tax-news.com, London

16 January 2001

Recent speculation that the government may reform betting in the UK by replacing punters' betting tax with a tax on bookmakers' profits (on the condition they cease their offshore activities and return lock-stock to the UK) was dispelled at the weekend by customs & excise press officer Claire Morgan.

Ms Morgan said: 'No decision regarding taxation has been taken. The government's position hasn't changed since the pre-budget statement. A decision will be announced by the chancellor as part of the Budget in March.'

Since the November pre-budget announcement last year, when chancellor Gordon Brown spoke of the recent trend of many major betting outlets relocating their operations offshore to escape the government's heavy betting tax, there has been much speculation over the government's plans. In realising the need to prevent the exodus before the government loses out on revenue altogether, the chancellor (wishing to avoid that nightmare) has hinted that changes will occur by saying: 'There is scope to modernise the way betting is taxed in the UK, while protecting the long-term revenues from betting duty and giving punters a better deal.'

Currently there is a 9% tax levied on winning bets. This is considered extortionate by most bookmakers who only have to turn to a plethora of low tax jurisdictions to compare the tax rate. Gibraltar, for example, with its 3% betting tax has attracted the offshore activities of leading UK bookmakers such as Ladbrokes and Victor Chandler.

However, any possible attempts to lure bookmakers back to the UK are likely to be difficult for the government. Bookmakers have invested millions in developing their offshore business which has proved to be extremely profitable for most, and the deal to lure them back to the UK would clearly have to be worth their while.

The UK press has this week summed up some responses from the industry's leading bookmakers. William Hill spokesman David Hood said: 'If it happens we would obviously welcome it, but we would not be moving everything back to the UK. We have established a massive call centre in Ireland at Athlone and that will remain. All that would change is where the bets are actually struck, which we would possibly have to relocate from Antigua, as at present, back to the UK. We have made a big investment in Ireland, creating huge employment in the area, and we would not be pulling the plug on that.'

Ladbrokes representative, Jennie Eaves, commented: 'This is nothing different really than proposals mentioned pre-budget last November and we are waiting to see what happens in this year's budget in March before we comment.' And in a BBC interview at the weekend, Victor Chandler said that it was far too early to consider the implications of the lifting of the 9% betting tax, stating that his operations were staying put in Gibraltar for the foreseeable future.

The UK betting industry has been calling on the government for some time now to reduce the betting tax to a more realistic level, but has clearly lost patience with Gordon Brown, who now faces some difficult decisions. The government, while dropping some hints and fuelling the speculation on the future of the UK bookmakers, insists on keeping the cards close to its chest but one thing is for sure - the budget this spring will herald changes for the betting industry and they had better be for the good otherwise Mr Brown's nightmare will become reality.

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