Customs and Excise is planning to tax gambling winnings in a bid to crack down on threatened revenue losses through offshore gaming via the internet.
Changes in the law to may be proposed in next year’s Finance Bill to ‘modernise tax regimes, moving tax to another part of the business chain’.
The hint about the crackdown to come came in a report from the Commons watchdog, the Public Accounts Committee, ordering Customs to do more to stem losses of up to £100m a year in revenue from taxes on gambling.
It was urged by Chairman David Davis following a report pointing to risks to revenue from one-armed bandits and other amusement machines and illegal betting as well as perfectly legal betting with bookmakers overseas by ‘phone and internet.
MPs welcomed Customs’ initiatives to address threatened losses through planned reforms of betting duty and working through the OECD, but cautioned: ‘Given the estimated losses of revenue, there is a risk that the department’s coverage will be insufficient to protect the integrity of gambling duties and miss opportunities to protect and increase revenue levels.’
The report pointed out Customs spent just £1.4m in 1998- 99 auditing duties totaling £1.5bn. It said they are in process of changing arrangements for allocating resources across these duties and VAT which ‘may reduce coverage of gaming duties’.
The report says Customs put estimated losses through illegal gambling alone at between £25m and £50m a year but bookies believe it could be as high as £100m. Davis said: ‘Illegal betting makes a substantial hole in the public purse each year. Customs and Excise have shown good awareness of the risks of illegal activity but their current thoughts on reducing the coverage of gambling duty is a cause for concern.
‘They should allocate sufficient resources to this important work to ensure that revenue is protected and every opportunity to increase revenue is taken.’