UK Betting industry enjoys £1 billion tax rebate
The news that the United Kingdom’s betting companies will get a hefty tax rebate of £1 billion (US$1.22 billion) was welcomed by the industry with a great enthusiasm and zeal, helping stocks valuations of leading betting companies to jump.
The betting industry plays a crucial role in the overall economy of the United Kingdom, but it has been in the doldrums for the last couple of months due to corona virus pandemic-induced shutdown. To assist the industry, the government reportedly announced that the betting industry would not have to pay sales tax of 20 percent on top of betting duty on fixed odds betting terminal (FOBT) revenues. Industry experts estimated that the tax rebate has provided the betting companies with an indirect financial assistance of one billion pounds.
In April, the country’s upper tax tribunal coincided with an August 2018 lower tribunal ruling, which found that the British government’s 20 percent sales tax or VAT on fixed-odds betting terminals in addition to a 15 percent betting tax was a breach of European tax law. It was the upper tribunal’s verdict in a long running case that was filed by bookmaker Betfred and casino and bingo hall operator Rank Group against British tax authorities. The panel members concluded that the British Treasury cannot levy the controversial 20 percent tax because the gaming machines were similar to casino table games like roulette that have been exempted from the tax.
The British taxation agency, Her Majesty’s Revenues & Customs (HMRC), said it would not appeal the upper tribunal’s ruling. Welcoming the announcement, Bookmaker William Hill said, “As a result of this announcement, we will now engage with HMRC to agree the support for, quantum and timing of the refund.”
The bookmaker added that it was expecting the net cash recovery through refunds, but it didn’t reveal the precise amount. However, the board has considered numerous scenarios that suggest a potential net cash recovery in the range of £125 million to £150 million.
Fixed odds betting terminals, which are a type of electronic slot machines, are located inside retail betting outlets to offer a wide range of digital versions of gambling. By the end of 2018, the craze for such games soared so much that critics labeled FOBTs as the “crack cocaine” of the high street having malicious effect on society.