William Hill and the Point of Consumption Tax
You might have seen William Hill chief executive Ralph Topping making headlines recently after his comments that the Point of Consumption Tax – an attempt by the UK government to charge 15% tax on online gambling – is actually illegal.
However, many of the reports have hardly touched on what the tax actually is, or why Mr Topping believes the industry will be able to fight its planned introduction in 2014.
So what are the issues at play here, and what could this mean for players?
So what’s the Point of Consumption Tax?
Since 2007, online gambling in the UK has been ‘liberalised‘, under the terms of the Gambling Act 2005, which also brought online gambling under the regulatory powers of the Gambling Commission.
A 15% tax is already in place for remote gambling operators based in the UK, who have also faced corporate tax rates of up to 30% in the years since the Act was introduced.
However, the Act also allowed companies based in certain white-listed countries to advertise to UK residents, making locations like Alderney, Antigua & Barbuda, the Isle of Man and Tasmania attractive options for gaming operators.
Those who shifted their operations to these locations also typically saw their tax bills drop substantially – making it almost impossible for UK-based firms to compete.
Now the government is looking to claw back those lost tax revenues, by introducing a Point of Consumption Tax which levies 15% duty on gambling profits made in the UK, even for firms based overseas.
William Hill’s Objection
William Hill have been working hard to clarify tax issues in online gambling in recent months, including trying to get sportsbook site Betfair to charge the horseracing levy to its members – but that’s another story.
In terms of the Point of Consumption Tax, their objection is quite straightforward – they claim it is illegal to impose a tax on a service that is supplied across international borders.
The betting and gaming partner Jason Chess of Wiggin & Co, a specialist media law firm, summed up the argument in a recent interview with the Telegraph.
He said: “You cannot restrict the free movement of goods and services in order to raise your own national tax. We can’t stop BMW from selling BMWs in this country because the tax is paid in Germany.”
It is this legal principle that William Hill are keen to uphold – ensuring that remote gaming operators based overseas do not face the UK’s punishing 15% rate of tax, on top of any taxes imposed in the jurisdiction where they are headquartered or licensed.
The Gaming Forecast for Players
What does all of this mean for online gamblers? Well, the Point of Consumption Tax is due to be introduced in 2014, so there’s a little while before anything should have a direct impact.
Until that time, look out for more headlines as William Hill pursue the case through the courts – Mr Topping says his lawyers have made “encouraging noises” about the company’s chances of success, so it may yet be the case that the tax is defeated before it is even introduced, with no major issues raised for players.