Exclusive: Gib body hires lawyers to fight UK tax proposals
Gibraltar Betting and Gaming Association spends £500k to hire two QCs to prepare legal case in a bid to stall or overturn coalition's proposals to tax UK-licensed operators at the point of consumption.
The Gibraltar Betting and Gaming Association (GBGA) has spent more than half a million pounds as it prepares to fight the UK government’s plans to impose a 15% point of consumption tax on operators at the end of 2014.
eGaming Review has learned from a number of sources close to the matter that 23 out of the 24 members of the GBGA, all Gibraltar licensees, have each paid an average of £22,000 to hire two experienced QCs to prepare a legal case that will aim to either stall or preferably abolish the coalition’s bid to tax UK-licensed operators at the point of consumption instead of the current point of supply. eGR understands that the only operator not to take part is bet365.
David Vaughan CBE, of the Brick Court Chambers, and Kevin De Haan, QC with the Francis Taylor Building are the lawyers in charge of building a case for the Gibraltar body.
According to his chambers’ website Vaughan has more than 45 years experience of practice, of which 27 years have been as Queen’s Counsel. He has appeared in more than 100 cases before the European Court of Justice and the Court of First Instance of the European Communities. Many of these are cases of “the greatest significance” in competition and in general EU law, the site says.
De Haan has been hired for his particular expertise and experience in gaming and e-commerce regulatory law. According to the Francis Taylor website de Haan has been closely involved in the development of the online gambling industry since its inception in the 1990s to the present day, having advised “most of the major (and many of the smaller) operators at some stage”. He drafted the newly enacted Gibraltar Gambling Ordinance and advised on regulatory aspects arising from the floatation of offshore online gambling operators on the London stock markets.
Both men are known to have visited the peninsula in recent weeks to meet with licensees and will deliver their findings shortly, a source in Gibraltar told eGR. Local lawyer, Peter Montegriffo, partner and team leader at Hassans in Gibraltar, is also known to be actively working alongside both men and the licensees involved in the case.
Jason Chess, partner and head of the betting and gaming at media law firm, Wiggin, said it was almost inevitable that the government’s attempts to reverse its policy and require offshore gambling companies to licence and pay tax here on their UK business, regardless of where they are located in the world, would face a legal challenge.
“EU law would only allow this on grounds of public interest and social good “ not on the desire to raise taxes alone which is the government’s stated aim. Now, a group of gambling companies based in Gibraltar are financing a challenge to the Government’s plans and legal opinion is that they may well succeed. Perhaps the planned gambling tax will go the same way as the planned pasty tax.”
John Penrose, the British government Minister responsible for gambling policy and regulation, announced in July last year that all on and offshore operators selling services into the UK would in future have to obtain a licence from the Gambling Commission if they wish to continue offering online gaming to UK customers.
In March’s budget announcement Chancellor George Osborne confirmed plans to tax operators offering bets to UK customers at a point of consumption rather than a place of supply. He said that the current duty regime for remote gambling introduced by the previous Labour government had allowed overseas operators to “largely avoid it “ and much of the industry has, as result, moved offshore”.
“Ninety per cent of online gaming in the UK consumed by our citizens is now supplied from outside the UK. And the remaining UK operations are under pressure to leave”, he added.
Gareth Martyn indirect tax director at PwC’s betting and gaming team, said at the time that the government would face “a number of challenges” ahead of the introduction of the duty to ensure that it can be effectively administered. “A similar form of duty is already in place in some mainland Europe states but it is interesting to note that the introduction of a similar regime in Ireland has been delayed for over a year,” he added.
A month later the UK Treasury published and began accepting comments on the policy design and the potential impact of the proposed POCT legislation that, despite not yet receiving a hearing in Parliament is scheduled to be implemented in December 2014.