Are British Betting Sites Actually Based In The UK?June 10, 2018 9:00 am
As each new disclosure of tax avoidance comes into the headlines, so more celebrities, companies and industries are tarred with the brush of tax avoidance.
Now, I’m not here to discuss why wholesome, highly important members of society like Gary Barlow and Ant and Dec feel they should not pay their full share of tax… I’m here to talk about the gambling industry which really was a pioneer of this behaviour.
Many British betting sites are actually headquartered abroad, in fact all of them are. They do this so they can funnel their profits through an office in a country with lower Corporation Tax.
Corporation Tax is 19% in the UK, which is actually lower than most worldwide corporation tax rates. That, however, isn’t enough for many UK companies, who (including nearly all gambling sites) have shifted headquarters to countries with lower tax – such as Ireland (12.5%) and Gibraltar (10%).
In reality these headquarters are nothing but a funnel for paying less tax and historically betting sites have been charged tax from point of supply meaning they’d get a much better rate by serving the UK from a non UK location.
Point Of Consumption Tax: Tax Loophole Closed
This issue came to a head in 2010, when the Treasury revealed they had lost around £1 billion in revenue to this scheme.
It took until 2014 but tax laws were finally changed to stop this by amending the 2005 Gambling Act. By making it a Point of Consumption Tax, the gambling sites now need to pay tax in the country where they make their profits – so that means in the UK (charged at 15%).
Bottom line… now all the British betting sites and casino’s that moved abroad have to cough up their taxes like the rest of us.
So from a punters perspective it doesn’t matter which ones you use, their all paying the same tax rate on profits.
Recommended UK Betting Sites
Can Betting Sites Avoid Tax In The Future?
Why do they not try to find another loophole here? Well, for one thing paying their taxes has been tied into the issuing of Gambling Licences. For a company to offer gambling services in the UK, they must be issued a licence (by the Gambling Commission).
Failure to comply with all relevant tax laws (including paying the Point of Consumption Tax) would result in the licence being revoked, effectively shutting the business down overnight.
This is pretty interesting, as the Gambling Industry is one of the few where it’s licence to operate is directly tied to it’s tax practises and whether it adheres to the law – which some people find unfair – personally I do not!
Is Great Britain Missing Out On Tax From Online Bookmakers?
This is one of the famous yes and no answers that I love giving out on this blog.
On the other hand of course, they are also happily taking advantage of the ability to base their corporate headquarters in a country with lower Corporate Tax rates – even though, as we discussed above, the UK already has a pretty generous tax rate for corporations.
Now, online bookmakers are no different from many other companies in this regard – Amazon, Facebook and Google are just three of the big companies who share the same practices with regard to Corporate Tax.
The other way to look at it though is that just because other people are doing it, doesn’t make it right. The big gambling companies are making money hand over fist – they are raking in record profits year after year.
To show you how much money they make, take Bet365 as an example. In 2016 they handled £47 billion in bets, made a profit of £525 million and paid their CEO (and founder) Denise Coates a salary, bonus and dividends package of £217 million.
They don’t pay Corporation Tax in the UK not because they can’t afford it – they don’t pay it here because they choose to make even larger profits for themselves.
At least we now have a point of consumption tax to claw back some of the money previously being taken out of the UK economy. We’re still missing out but by a lot lot less than pre 2014.