UK bookmakers haven’t been a very happy bunch this year as the government passed a bill on Fixed Odds Betting Terminals (FOBTs) reducing the maximum bet from £100 to £2. This was a huge blow to gambling operators who derive more than 50 percent of their revenue from FOBTs which is by far the most popular form of gambling in the UK.
Betfred, one of the major bookmakers in the UK had filed an appeal against the HM Revenue & Customs (HMRC) stating that they imposed illegal taxes on FOBTs during 2005 and 2013. The company had to shell out a 20% VAT on FOBTs along with another 15% tax filed under betting duty. Betfred claimed that while it paid out these taxes, the HMRC did not impose a similar tax on online casinos and brick & mortar casinos who offered their patrons similar roulette themed games.
A tax tribunal looked at the case and ruled in favour of Betfred stating that the HMRC had breached European fiscal neutrality and did not act fairly. The HMRC dropped the 20% VAT tax on UK bookmakers and replaced it with another 20% tax which falls under machine games duty. The 20% tax has also been increased to 25% which forces FOBT operators to shell out a massive amount on taxes.
Betfred was happy that the tax tribunal ruled in its favour as the company is expected a tax rebate of nearly £100 million.
UK Bookmakers To Get A Combined £1 Billion
If the HMRC appeals the ruling and loses or chooses not to appeal the ruling, then UK bookmakers are expected to get a combined tax rebate of up to £1 billion as they paid a total of £8 billion on FOBT taxes during 2005 to 2013. A representative of the HMRC said that the decision made by the tax tribunal was very important and the HMRC would take their time to review the decision and then decide on what will be their next step.
In a statement, Mark Stebbings, managing director for Betfred said
We welcome the decision regarding the historical tax treatment of FOBTs, which pre-dates the introduction of machine games duty in February 2013. It does not concern Betfred’s ongoing tax liabilities
Betfred is owned by billionaire Fred Done who is one of the main donors of the Conservative party.