Gambling firms start legal fund to fight government tax crackdown

10 biggest online betting operators in the UK locate all or part of the booming business in tax havens

Gambling executives are planning to spend hundreds of thousands of pounds to keep open a tax loophole estimated to cost British taxpayers £250m a year.

A £500,000 fighting fund has been established by bookmakers and casinos in Gibraltar to fight the Coalition’s introduction of a 15 per cent duty on bets placed online in Britain.

Under the auspices of the Gibraltar Betting and Gaming Association, they have warned the UK government that if it proceeds with the reform, they will mount a challenge under EU law.

The move is part of a tug of war over the £2 billion annual ‘house win’ from remote betting on horseracing, football and the casino games of roulette, poker, and blackjack.

The 10 biggest online betting operators in the UK locate all or part of the booming business in the tax havens of Gibraltar, the Isle of Man and Guernsey.

An Independent investigation suggests that since the offshoring intensified four years ago it has cost the UK taxpayer £1bn, far more than the highly publicised tax avoidance by the US firms Starbucks and Amazon.

From December 2014, the Coalition Government intends to change the levying of betting duty from where bets are processed to the ‘point of consumption’ - in other words, where they are laid.

Any company that tried to dodge the duty by refusing to apply for a licence from the Gambling Commission could see its website or advertising blocked in the UK.

There is intense opposition to the move in Gibraltar, a British overseas territory which has become an international gambling hub by levying duty of under 1 per cent.

Since 2009 William Hill, Ladbrokes and Betfair have all moved their online sports betting arms to the Rock, and gambling now employs 4,000 people on the two square mile territory, one in eight Gibraltarians, and contributes 15 per cent of government revenues.

Bookmakers  -who pay UK corporation tax on their high street branches - have mounted a determined two-year campaign against a ‘point of consumption’ tax, including a behind-the-scenes lobbying operation. Representatives of William Hill and its smaller competitor Ladbrokes met the Tourism Minister John Penrose four times each in the year to July 2011 before the Government announced its plans in the House of Commons.

However the main focus of the industry’s campaign appears to have shifted to the law courts.

William Hill –estimated to save £37m a year in UK tax through offshoring - warned the Commons last week that the duty was “ill conceived” and “will lead to a strong and sustained legal challenge.” The company, Britain’s biggest bookmaker, told a cross-party committee of MPs that a ‘point of consumption’ tax should be no more than 5 per cent.

The Gibraltar Betting and Gaming Association (GBGA), whose members include the Rock’s major betting firms, has raised a legal fighting fund of £500,000 to “institute judicial review proceedings to challenge these measures.”

Two QCs are thought to be preparing a legal challenge.

In a submission to the Commons Culture, Media and Sport Committee, published at the end of last week, the GBGA said: "In the event that the Government determines to proceed with the proposed legislation and fiscal reforms, the GBGA will regrettably have little alternative but to institute judicial review proceedings to challenge these measures."

Britain’s plans breach European Union law because they would offer an unfair advantage to gambling companies physically located in the UK, the industry body said.

It added that the law would also have a "profound negative impact on the economy of Gibraltar" because it would force many operators to relocate to the UK instead.

Bookmakers have warned they need to base their online businesses overseas to avoid being undercut by foreign rivals and accuse the Treasury of failing to heed their warnings that they would leave the UK because of the rate of general betting duty.

William Hill declined to comment on the legal moves last night, but told the Independent last week: “The UK Government is likely to be in breach of fundamental EU principles of freedom of establishment and free movement of services leaving itself open to legal challenge.

“The current proposals do nothing to help stimulate or create a climate for investment and growth, in a sector which is a British success story and one that we should all be proud of.”

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Recruitment Genius: Web Developer - Junior / Middleweight

Negotiable: Recruitment Genius: One of the South East's fastest growing full s...

Guru Careers: Marketing Manager / Marketing Communications Manager

£35-40k (DOE) + Benefits: Guru Careers: We are seeking a Marketing Communicati...

Recruitment Genius: Commercial Engineer

£30000 - £32000 per annum: Recruitment Genius: Estimating, preparation of tech...

Recruitment Genius: IT Support Technician

£14000 - £17000 per annum: Recruitment Genius: You will work as part of a smal...

Day In a Page

Blundering Tony Blair quits as Middle East peace envoy – only Israel will miss him

Blundering Blair quits as Middle East peace envoy – only Israel will miss him

For Arabs – and for Britons who lost their loved ones in his shambolic war in Iraq – his appointment was an insult, says Robert Fisk
Fifa corruption arrests: All hail the Feds for riding to football's rescue

Fifa corruption arrests

All hail the Feds for riding to football's rescue, says Ian Herbert
Isis in Syria: The Kurdish enclave still resisting the tyranny of President Assad and militant fighters

The Kurdish enclave still resisting the tyranny of Assad and Isis

In Syrian Kurdish cantons along the Turkish border, the progressive aims of the 2011 uprising are being enacted despite the war. Patrick Cockburn returns to Amuda
How I survived Cambodia's Killing Fields: Acclaimed surgeon SreyRam Kuy celebrates her mother's determination to escape the US

How I survived Cambodia's Killing Fields

Acclaimed surgeon SreyRam Kuy celebrates her mother's determination to escape to the US
Stephen Mangan interview: From posh buffoon to pregnant dad, the actor has quite a range

How Stephen Mangan got his range

Posh buffoon, hapless writer, pregnant dad - Mangan is certainly a versatile actor
The ZX Spectrum has been crowd-funded back into play - with some 21st-century tweaks

The ZX Spectrum is back

The ZX Spectrum was the original - and for some players, still the best. David Crookes meets the fans who've kept the games' flames lit
Grace of Monaco film panned: even the screenwriter pours scorn on biopic starring Nicole Kidman

Even the screenwriter pours scorn on Grace of Monaco biopic

The critics had a field day after last year's premiere, but the savaging goes on
Menstrual Hygiene Day: The strange ideas people used to believe about periods

Menstrual Hygiene Day: The strange ideas people once had about periods

If one was missed, vomiting blood was seen as a viable alternative
The best work perks: From free travel cards to making dreams come true (really)

The quirks of work perks

From free travel cards to making dreams come true (really)
Is bridge the latest twee pastime to get hip?

Is bridge becoming hip?

The number of young players has trebled in the past year. Gillian Orr discovers if this old game has new tricks
Long author-lists on research papers are threatening the academic work system

The rise of 'hyperauthorship'

Now that academic papers are written by thousands (yes, thousands) of contributors, it's getting hard to tell workers from shirkers
The rise of Lego Clubs: How toys are helping children struggling with social interaction to build better relationships

The rise of Lego Clubs

How toys are helping children struggling with social interaction to build better relationships
5 best running glasses

On your marks: 5 best running glasses

Whether you’re pounding pavements, parks or hill passes, keep your eyes protected in all weathers
Joe Root: 'Ben Stokes gives everything – he’s rubbing off on us all'

'Ben Stokes gives everything – he’s rubbing off on us all'

Joe Root says the England dressing room is a happy place again – and Stokes is the catalyst
Raif Badawi: Wife pleads for fresh EU help as Saudi blogger's health worsens

Please save my husband

As the health of blogger Raif Badawi worsens in prison, his wife urges EU governments to put pressure on the Saudi Arabian royal family to allow her husband to join his family in Canada