UK bookies get one back on the tax man after incorrect VAT charges

Bookmakers in the United Kingdom could soon be laughing all the way to the bank after winning a landmark case against HM Revenue & Custom.

A tribunal in the UK ruled in favour of the bookmakers for a £1 billion tax rebate, in a wrongful VAT charges on revenue from fixed odds betting terminals (FOBTs).

High-street bookmaker Betfred sued HM Revenue & Custom for the illegal charges resulting in a major victory for an industry already in distress after the government announced plans to cut maximum bets on FOBTs from £100 to £2.

The tax tribunal in its ruling said, charging VAT on FOBTs between 2005 and 2013 “breached the principle of fiscal neutrality” since similar roulette-style games played online and in casinos were VAT free.

It is not clear whether the HMRC would appeal against the ruling, but a spokesperson for the agency said, “This is an important judgment and HMRC is giving it careful consideration.”

A no appeal or unsuccessful appeal by the HMCR would mean about £1 billion in tax rebates would be paid to bookmakers. Betfred is expected to reclaim about £100 million according to industry sources.

There is speculation among campaigners that a decision to delay the implementation of the FOBT stake reduction until April 2020, was because the Treasury expected Betfred, owned by billionaire Fred Done, to win the case.

The postponement would lessen the impact of the £1bn tax rebate by enabling it to continue collecting duty from FOBTs.

The delay is a double win for bookmakers as they derive about £1.8bn a year in revenue from FOBTs.

Labour MP Carolyn Harris is concerned about the delay, accusing the government of playing ‘Russian roulette’ with compulsive gamblers as the saga drags on.

“Instead of giving the bookies a double win, Treasury should instead put the tax for remote [online] gambling up to at least 25% in the budget this year and enact a £2 stake on FOBTs by April 2019,” The spokesperson for Fairer Gambling, Matt Zarb-Cousin said.