Dispute Escalates As Online Gambling Tax Referred To Europe

The government is coming up against stiff opposition from gambling companies as the new tax on internet based gambling continues to cause problems.

This ongoing battle between the government and opposing online gambling companies isn't going away and the government has been challenged once more. Things have escalated and the dispute is now being referred to Europe.

On Tuesday the High Court issued a ruling that will see the Luxembourg Court of Justice of the European Union (CJEU) deciding on the issues that have been raised in the row between the Gibraltar Betting and Gaming Association (GBCA) and HM Revenue & Customs. This dispute comes after the point of consumption (PoC) tax was introduced back in December 2014. This new tax imposes a 15% duty on all online gambling profits generated within the UK.

Large establishments such as Ladbrokes and William Hill originally set up their online gambling businesses when there was low or no taxes to pay. This new tax law closes a loophole that allowed online gambling companies to legally operate without having to pay additional taxes.

The GBCA, which acts on behalf of gambling companies based in the British Overseas Territory, has challenged this new tax via the British courts system. According to Ivor Jones, a Numis analyst, the referral to the CJEU could result in the PoC tax being found unlawful and this will be a big blow to the HMRC. Mr. Jones also went on to say that, "the CJEU will be asked to rule on whether the UK Government's aim in creating the regime is legitimate. This could make the Government vulnerable as it referred to diminishing the competitive advantages of overseas operators and increasing UK tax revenue, which may be held to be unacceptable aims if implementation also reduces EU competition."

If this is found to be true, according to Mr. Jones, the Government could be forced to refund all the duty they have collected since the introduction of this new tax regime. It has also been speculated that the Government may look to resolve this matter themselves before it gets to court. A spokesman for HMRC has said: "The judgment has not found against any aspects of the UK gambling tax regime, and we remain confident that the place of consumption reform for the gambling tax regime is lawful." He also went on to say that there were considering the judgment in full before they would respond.