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  General Betting Duty

This speech was given as part of the Standing Committee debate on the Finance Bill, 6 May 2004

Clause 15

General betting duty: pool betting

Question proposed, That the clause stand part of the Bill.

Mr. Richard Bacon (South Norfolk) (Con): I welcome you to the Chair, Sir John. I said on Second Reading that I was an undergraduate student of Finance Bills and I think that that has been demonstrated amply. My hon. Friend the shadow Paymaster General is, of course, delirious about the subject of betting duty in general, and pool betting in particular, but unfortunately he has been unable to join us this afternoon, so he asked me to comment on the clause. It provides for all pool betting, on both dog racing and horse racing, to be brought under the general betting provisions.

As online betting exchanges have developed in recent years, there has been growing concern that they provide not only an innovative and convenient way for clients to place a bet, but a way for some people to establish themselves as, in effect, unlicensed bookmakers, and therefore escape the 15 per cent. tax on profits incurred by traditional bookmakers. It certainly appears that there has been a broad welcome for the clause from the industry, at least from the traditional industry, because it has become increasingly clear that there has not been equal tax treatment of traditional bookmakers and those who act as bookmakers on betting exchanges.

I have just one question for the Minister. At present, the liability of certain types of pool betting to general betting duty depends on where and by whom the betting is being provided or promoted. Although the Government's proposed changes will mean that any pool betting, at least on dog racing and horse racing, will fall within the scope of general betting duty, so long as the promoter or the totalisator is in the UK, an obvious question arises. As proposed new section 12(4A) of the 1981 Act, in subsection (8), says:

''A bet is an on-course bet for the purposes of this Part of this Act''

if it is made

''with a bookmaker present at the meeting''

''by means of a totalisator situated in the United Kingdom''.

That raises concerns about what assessments the Government may have made of the potential size of the shift towards offshore online betting as a result of such changes. If an individual who currently practises as an unlicensed bookmaker through a betting exchange were to move his activities offshore, there could be considerable scope for abuse of the rules on UK residency. I can imagine that it would be quite easy for someone to seek to avoid the effects of the proposed changes by locating outside the UK, or at least purporting to do so, while actually continuing to spend significant periods of time here.

In conclusion, the clause is broadly welcome, but there are concerns about whether it may result in some unintended consequences. I look forward to hearing what the Minister has to say about that.


See also:
SPEECHES: The folly of the Whisky strips stamps tax
SPEECHES: Gift aid


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