Treasury opens POC tax consultation

The UK Treasury has published and begun accepting comments on the policy design and the potential impact of proposed legislation to tax online gambling operators at a point of consumption rather than the current levy on place of supply.

Following Chancellor George Osborne’s budget announcement last month confirming plans to tax operators offering bets to UK customers at a point of consumption and the Treasury’s initial remote gambling taxation review last autumn, the government department said it would be “grateful” for respondents’ contributions to the review process. The Treasury’s website explains that the views of those involved in this process will “help shape the final policy design of the reform” which the government plans to introduce in December 2014.

The coalition government also plans to introduce an amended regulatory framework, which will require remote gambling operators, wherever they are based, to hold a Gambling Commission licence in order to advertise, and provide services, to British customers, at the same time as the new POC duty comes into force. These changes to the regulatory regime would also require primary legislation.

The consultation “Taxing remote gambling on a place of consumption basis: consultation on policy design” seeks comments on further details of the proposed design characteristics of the regime, the Treasury’s site says.

The site says that it is “interested in feedback from all stakeholders” including operators, gambling software suppliers, advertisers of remote gambling services, trade bodies and “all other stakeholders who have an interest in remote gambling taxation”.

“The government welcomes general views on the proposed policy design, and also seeks answers to some specific questions. It also welcomes comments on the summary of impacts provided in Chapter 5 of the document,” it adds.

John Penrose, 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.

A bill calling for a point of consumption tax to be imposed on British-facing egaming operators then followed and was granted a second hearing on 8 February last year. Introduced by Member of Parliament and Conservative MP for West Suffolk Matt Hancock under the Ten Minute Rule, the bill was brought on the premise that offshore operators are depriving horse racing authorities of funding, and consequently also looks to ensure operators contribute to the horse racing levy. The bill was due to be heard on 30 March this year, however as Parliament did not sit on that day no further movement has since taken place.

In his budget speech on 21 March Osbourne said that the current duty regime for remote gambling introduced by the last government levied on a place of supply basis 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.

At the time of the budget announcement Gareth Martyn, indirect tax director at PwC’s betting and gaming team, said: “The government faces 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 note by law firm Olswang on the opening of a consultation period on point of consumption tax proposals said that the parallel regulatory scheme is “more vulnerable to challenge under EU law than the POC tax itself”.