Some of Britain’s biggest bookmakers are facing a new tax as the Government seeks to close a loophole to bring offshore businesses in line with operations at home.
Ladbrokes, William Hill and a host of smaller operators will be slapped with a 15 per cent levy on operations situated in jurisdictions like Gibraltar which have more favourable tax regimes. The Treasury has unveiled a raft of rules set to come into force in December next year following a two year consultation. The major change is that where a firm is located will become irrelevant because the tax will be levied on where a player is based.
For years Ladbrokes, Bwin.party, William Hill and Betfair pushed their online operations to Gibraltar, where taxes are levied at 1 per cent and capped at £425,000, to get around UK tax laws.
The Government made it clear that it would stamp out this practice and the new rules should raise an additional £300million.
Sajid Javid, economic secretary to the Treasury, said: ‘The new rules will create a level playing field across the industry. It is unacceptable that gambling companies can avoid UK taxes by moving offshore, and the government is taking decisive action to ensure this can no longer happen in the future.’
The rules, despite being widely expected, are still a blow to the industry which has struggled to make the transition online. Gamblers have found it more convenient to play on their tablets or mobile phones rather than walk into High Street stores which has put pressure on bookies to transform their web offerings. The Gambling Commission estimates that the UK remote gambling market is worth more than £2billion per year.
The impending rules will be supported by new enforcement measures including the creation of criminal offences. Failure to comply with them could result in prison sentences of up to seven years, unlimited fines or the loss of a remote gambling operator’s licence.
William Hill, which has the largest share of the UK’s remote gambling market, has previously suggested that it could challenge the changes on the grounds that they breach European Union competition law. Shares in William Hill fell 5.2p to 421.4p while Ladbrokes rose 0.4p to 187.7p.