UK To Enforce Horseracing Levy

by Jason Gorringe, Tax-News.com, London

19 April 2010

The Labour government has asserted that it will crack down on gambling companies with operations in offshore territories that target the UK market but do not contribute to the industry's upkeep via the UK’s Horse Racing Levy.

The move is in response to a recent offshore exodus of bookmakers to avoid the UK tax net, as recently was seen in the case of William Hill and Ladbrokes. The two bookmakers have for years warned of the uncompetitiveness of the UK gambling tax regime, which, they said, puts offshore at a significant comparative advantage.

Labour has said that it would move to encourage the payment of the Horseracing Levy by retracting the UK licenses of gambling operators in offshore territories that do not contribute towards the houseracing industry in the UK.

Announcing the proposals, Labour’s Sports Minister, Geryy Sutcliffe was quoted by the BBC as stating:

"We will work up proposals with the [Horserace Betting Levy Board] to deliver an increase in levy payments which will be reinvested into the sport."

"This is also about making sure overseas firms contribute their fair share towards regulatory costs and vital services."

"These plans will help protect British jobs by assisting British betting operators who to date have remained in the country and pay their fair share to racing. They will no longer face an uneven playing field."

The Conservatives have also backed the proposals, but have described the levy as “outdated” stating instead that the party would introduce “a commercially-viable alternative, which would work for everyone.”

With political rhetoric the dish of the day, the parties' proposals will be welcome crowd-pleasers ahead of the general election but do little to tackle the problem at hand, as highlighted by UK gambling companies; for as long as the UK tax regime is internationally uncompetitive, companies will continue to investigate cost efficiencies offshore.

Under Gibraltar’s more competitive tax regime, gambling companies pay as little as 2% on profits, less than the 25% on profits levied under the UK regime.

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