Battle over online gambling tax referred to Europe
The battle between online gambling companies and the Government over the new tax on internet-based betting has escalated after the dispute was referred to Europe, The Telegraph reports.
The High Court on Tuesday ruled that the Luxembourg-based Court of Justice of the European Union (CJEU) should decide on the issues raised by a clash between the Gibraltar Betting and Gaming Association (GBCA), which represents a host of online gambling firms, and HM Revenue & Customs.
Last December, the so-called point of consumption (PoC) tax came into force, imposing a 15 per cent duty on all online gambling profits generated in the UK.
Many companies, including Ladbrokes and William Hill, had set up their digital betting businesses in low or nil-tax environments. The new levy was introduced to close this loophole.
However, the GBCA, which acts for betting firms based in the British Overseas Territory, has challenged the tax through the British courts. The referral to the CJEU raises the prospect that the PoC tax “will be found unlawful”, said Numis analyst Ivor Jones, which would deal a blow to HMRC.
“The CJEU will also be asked to rule on whether the UK Government’s aims in creating the regime are legitimate,” Mr Jones said. “The Government may be vulnerable here since it referred to diminishing the competitive advantage of overseas operators and increasing UK tax revenue, which may be held to be unacceptable aims if implementation also reduces EU competition.”
He added: “In theory, the Government could be obliged to refund all the duty it has collected under this regime. Given the political potency of debates about Europe, the Government may seek to save face and resolve the matter before it gets to court.”
A spokesman for HMRC said: “The judgment has not found against any aspects of the UK gambling tax regime, and we remain confident that the place of consumption reform for the gambling tax regime is lawful. We are considering the judgment in full before deciding how to respond.”
