UK Point of Consumption Tax

Commencing on the 1st December, 2014, all betting companies that are serving customers in the UK will be required to pay 15% POC (point of consumption) tax on the gross profits that are generated from UK customers.

The new rules will apply for General Betting Duty (GBD), Pool Betting Duty (PBD), and Remote Gaming Duty (RGD). HM Revenues and Customs define what is meant by each of the categories as:

•   GBD applies to fixed odds betting and pool betting on horse and dog racing.

•   PBD applies to pool betting (other than on horse and dog racing) and non-fixed odds betting.

•   RGD applies to remote gaming, for example casino games and bingo played over the internet.

HM Revenues and Customs have decided to change how these duties are taxed. From December 1st, it will be controlled on a ‘place of consumption’ basis, as opposed to the former ‘place of supply’. This means that no matter where in the world you are based, if you are supplying gambling services to a UK resident, you will be liable for one or more of the taxes.

There are 2 apparent reasons behind this point of consumption tax; firstly the government believe that it will provide the nation’s tax coffers with an estimated yearly increase of around £300 million. Secondly, according to Sajid Javid, the Economic Secretary to the Treasury, the tax will “ensure that remote gambling operators who have UK customers make a fair contribution to the public finances”.

The Remote Gambling Association (RGA) has expressed its concerns with the tax as it believes that it could cause many firms to go out of business. Furthermore, the RGA believes that more UK customers may switch to using gambling services from “offshore duty avoiding providers”, as they will be able to offer superior services.

 

Preparing for the Changes

To find out if this change will affect you, HMRC advises that you ask your customers whether they usually reside in the UK or not and also collect and analyse separate data to verify the customer responses. More information about this process can be found here.

If this change does affect your business, the immediate advice is; to make sure that everyone in your organisation, who needs to know, is kept informed and up to date, and also that in-house procedures and systems are reviewed accordingly.

Furthermore, if you are liable to pay the 15% POC being introduced at the end of the year, you must register before the 1st of December. The gambling tax online service for registering portal will open in early autumn for this.

The HMRC website will post more information about how to prepare for these changes over the coming months and the Think Management blog will also help keep you up to date.

Contact Think Management if you require help or advice registering with UK Gambling Commission.