U.K.Operator Betfred Ruled Correct On Fiscal Neutrality Issue

Published Sunday, July 29, 2018 - Online-Casinos.com
U.K.Operator Betfred Ruled Correct On Fiscal Neutrality Issue

The government is the supreme commander when it comes to gambling rules and regulations and when the authorities decide to change the rules sometimes there is push back from the affected businesses. The recent claim by U.K. operator Betfred  that the value added tax (VAT) applied to revenue from fixed odds betting terminals was in contravention of the concept of ‘fiscal neutrality,’ in so much that similar products weren’t subject to the same tax has implications for the online betting industry.

A first-tier tribunal ruled Betfred correct in the courts which could inadvertently bring new limits on online casino activity. The tribunal said that slots  “all met the same need from the point of view of the customer,” regardless of whether they were based on an a fixed odds betting terminal or some other form of betting applying the same rules for roulette, card games and virtual racing games.

The ruling has yet to be discussed by HM Revenue & Customs (HMRC) which applied the Value Added Tax to FOBT revenue gained by Betfred between December 2005 and January 2013, after which the authorities introduced a 20% Machine Games Duty, which was later raised to 25% in 2014.

Betfred may receive a £100m VAT refund, and if the rules are applied across the board the government may have to pay out an estimated £1.9b to other operators in the same boat. It is likely however the U.K. government will appeal the ruling and a delay of more than the established 2020 date for FOBT implementation will be much longer than that. The authorities will undoubtedly be raising taxes on other gaming products in order to mitigate losses from the reduced tax rate on FTOB s.

Legally land-based electronic gaming is indistinguishable from the online betting so the government could in fact impose the £2 maximum stake to online slots as well as other casino games.  




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