UK Treasury Fights Back On Fleeing Betting Tax Revenue

Tax-news.com

31 October 1999

The UK Treasury (Finance Ministry) last week confirmed that it would try to extend its existing CFC (Controlled Foreign Corporation) in order to tax the profits being made in offshore jurisdictions by bookmakers who have expatriated their UK betting operations in order to avoid betting duty. Currently the rules catch overseas subsidiaries of British companies that pay tax on retained profits that is more than 75% below the UK rate of corporation tax, and require the missing tax to be paid in the UK.

Companies sometimes use the 'designer' tax regimes in offshore centres to pay just more than the minimum permitted level, but the Treasury announced two weeks ago that it is closing this loophole also. Gibraltar and the Isle of Man, where much of the exported betting has ended up, both have such regimes. The Treasury said that it has asked the Gibraltar authorities to examine the companies concerned very carefully, because 'the UK taxpayer is losing out'. Well, yes, and no.

Meanwhile, in the UK, remaining bookmakers offered a near-10% increase on the money they pay to the British Horseracing Levy Board, which has rejected the offer. The bookmakers say that they cannot afford more unless the Government reduces betting taxes. They say they are seriously threatened by offshore and Internet betting and gambling. The Home Secretary will have to resolve the impasse.

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