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.”

Voices
A Russian hunter at the Medved bear-hunting lodge in Siberia
Save the tigerWildlife charities turn to those who kill animals to help save them
News
Davis says: 'My career has been about filling a niche - there were fewer short actors and fewer roles – but now I'm being offered all kinds of things'
PeopleWarwick Davis on Ricky Gervais, Harry Potter and his perfect role
News
i100
Sport
Frank Lampard will pass Billy Wright and equal Bobby Charton’s caps tally of 106 caps against
sportFormer Chelsea midfielder in Etihad stopgap before New York contract
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Arts and Entertainment
The first film introduced Daniel Radcliffe to our screens, pictured here as he prepares to board the train to Hogwarts for the first time.
booksHow reading Harry Potter helps children grow up to be gay-friendly
Arts and Entertainment
A scene from Aladdin is performed at the Tony Awards in New York in June
theatreBrit producer Lythgoe makes kids' musical comedy a Los Angeles hit
Sport
Usain Bolt of Jamaica smiles and shakes hands with a competitor after Jamaica won their first heat in the men's 4x100m relay
sport
News
Chancellor George Osborne, along with the Prime Minister, have been 'complacently claiming the economy is now fixed', according to shadow Chancellor Ed Balls
i100... which is awkward, because he is their boss, after all
Life and Style
A small bag of the drug Ecstasy
Health
Life and Style
Floral-print swim shorts, £26, by Topman, topman.com; sunglasses, £215, by Paul Smith, mpaulsmith.co.uk
FashionBag yourself the perfect pair
News
news
News
Netherlands' goalkeeper Tim Krul fails to make a save from Costa Rica's midfielder Celso Borges during a penalty shoot-out in the quarter-final between Netherlands and Costa Rica during the 2014 FIFA World Cup
newsGoalkeepers suffer from 'gambler’s fallacy' during shoot-outs
News
people
Arts and Entertainment
Standing the test of time: Michael J Fox and Christopher Lloyd in 'Back to the Future'
filmReview: A week late, Secret Cinema arrives as interactive screening goes Back to the Future
Extras
indybest
News
i100
Independent
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
santorini
Up to 70% off luxury travel
on chic beach resorts Find out more
sardina foodie
Up to 70% off luxury travel
on country retreats Find out more
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

(Senior) IT Support Engineer - 1st-3rd Line Support

£40000 per annum: Ashdown Group: A successful IT service provider that has bee...

Wind Farm Civil Design Engineer

£55000 - £65000 Per Annum: The Green Recruitment Company: The Green Recruitmen...

Principal Marine Mechanical Engineer

£60000 - £70000 Per Annum: The Green Recruitment Company: The Green Recruitmen...

Principle Geotechnical Engineer

£55000 - £65000 Per Annum: The Green Recruitment Company: The Green Recruitmen...

Day In a Page

Save the Tiger: Meet the hunters tasked with protecting Russia's rare Amur tiger

Hunters protect Russia's rare Amur tiger

In an unusual move, wildlife charities have enlisted those who kill animals to help save them. Oliver Poole travels to Siberia to investigate
Transfers: How has your club fared in summer sales?

How has your club fared in summer sales?

Who have bagged the bargain buys and who have landed the giant turkeys
The best swim shorts for men: Bag yourself the perfect pair and make a splash this summer

The best swim shorts for men

Bag yourself the perfect pair and make a splash this summer
Dress the Gaza situation up all you like, but the truth hurts

Robert Fisk on Gaza conflict

Dress the situation up all you like, but the truth hurts
Save the tiger: Tiger, tiger burning less brightly as numbers plummet

Tiger, tiger burning less brightly

When William Blake wrote his famous poem there were probably more than 100,000 tigers in the wild. These days they probably number around 3,200
5 News's Andy Bell retraces his grandfather's steps on the First World War battlefields

In grandfather's footsteps

5 News's political editor Andy Bell only knows his grandfather from the compelling diary he kept during WWI. But when he returned to the killing fields where Edwin Vaughan suffered so much, his ancestor came to life
Lifestyle guru Martha Stewart reveals she has flying robot ... to take photos of her farm

Martha Stewart has flying robot

The lifestyle guru used the drone to get a bird's eye view her 153-acre farm in Bedford, New York
Former Labour minister Meg Hillier has demanded 'pootling lanes' for women cyclists

Do women cyclists need 'pootling lanes'?

Simon Usborne (who's more of a hurtler) explains why winning the space race is key to happy riding
A tale of two presidents: George W Bush downs his paintbrush to pen father’s life story

A tale of two presidents

George W Bush downs his paintbrush to pen father’s life story
Restaurateur Mitch Tonks has given the Great Western Pullman dining car a makeover

The dining car makes a comeback

Restaurateur Mitch Tonks has given the Great Western Pullman dining car a makeover
Gallery rage: How are institutions tackling the discomfort of overcrowding this summer?

Gallery rage

How are institutions tackling the discomfort of overcrowding this summer?
Louis van Gaal has £500,000 video surveillance system installed to monitor Manchester United players

Eye on the prize

Louis van Gaal has £500,000 video surveillance system installed to monitor Manchester United players
Women's rugby: Tamara Taylor adds fuel to the ire in quest to land World Cup

Women's rugby

Tamara Taylor adds fuel to the ire in quest to land World Cup
Save the tiger: The day America’s love of backyard tigers led to a horrific bloodbath

The day America’s love of backyard tigers led to a horrific bloodbath

With only six per cent of the US population of these amazing big cats held in zoos, the Zanesville incident in 2011 was inevitable