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UK Clarifies Compliance Regime For Remote Gaming Change

by Jason Gorringe, Lowtax.net, London
19 September, 2014

HM Revenue and Customs (HMRC) has released a new guide to support offshore betting and gaming operators to register to account for UK tax ahead of an upcoming change to UK tax rules.

From December 1, 2014, HMRC is changing the rules for General Betting Duty (GBD), which applies to fixed odds betting and pool betting on horse and dog racing; Pool Betting Duty (PBD), which applies to pool betting (other than on horse and dog racing) and non fixed odds betting; and Remote Gaming Duty (RGD), which applies to remote gaming, such as casino games and bingo played over the internet.

The new rules will affect remote gambling industry businesses who offer remote betting and gaming to UK consumers from outside the UK, and UK land-based betting businesses, such as high street betting shops. Land-based gaming sector businesses, such as casinos and bingo halls, will not be affected by these new rules unless they offer remote betting or gaming. Premises-based betting and the treatment of spread betting will be unaffected except for some administrative changes.

Under the current tax rules, gambling activities are taxed on a 'place of supply' basis. This has meant that those supplying gambling services from the UK pay tax on all of their gross gambling profits in the UK, while operators supplying UK customers from outside the UK pay no UK gambling taxes. This disparity has encouraged many operators to relocate at least some of their activities to territories that offer more conducive tax regimes for gaming and betting operators.

HMRC is changing the basis of how these duties are taxed from 'place of supply' to 'place of consumption' from December 1. This mean that persons offering remote gambling services to UK-resident persons will become liable to one or more of the aforementioned taxes. They will be required to register for the appropriate tax, submit returns, and pay any tax due in pound sterling.

HMRC is introducing a new online service to facilitate the change. The GT online service will enable impacted businesses to: register their business or group for GBD, PBD and/or RGD; make changes to registration details; deregister; and submit returns.

The UK's latest guide sets out how to register, how to determine whether the customer is based in the UK, and accounting periods for each of the levies. The guide states that, depending on the territory in which the business is located, the appointment of a fiscal representative may be required.

HMRC recently announced that it had reached an agreement with Gibraltar and the Isle of Man to enable businesses in those territories to not appoint a tax representative in the UK. It has confirmed negotiations are ongoing towards similar agreements with Guernsey and Alderney.

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