Offshore Gambling and the Horseracing Levy

Richard Fuller Excerpts

Wednesday 13th July 2011 Commons Chamber

[Matthew Hancock]

Absolutely, because almost all betting on point-to-point racing is on-course, and one cannot be both offshore and on-course at the same time. Point-to-point racing is a critical part of local and, especially, rural livelihoods. I know that my hon. Friend the Member for Hexham (Guy Opperman) would also like me to make the same point in his absence. He cannot be here because he is recovering from a serious illness, but he is an experienced point-to-point rider.

The levy, prize money and tax revenues are all falling sharply. Why is this? Over the past few years, more and more betting companies have moved offshore. Only two of our 19 biggest bookmakers are now onshore for tax and levy purposes. The previous Government did a deal with the gambling industry—they would not put the levy up, and in return the bookies would stay onshore—but the bookies have gone. I can understand their reason, because once one competitor has moved offshore and does not pay tax or the levy, the competitive pressure on others to move offshore becomes great. I have had many bookies come to me and say, “We would like a level playing field, because it isn’t fair to be driven offshore by competitors who are not paying tax when you are.” Today I would like to propose that instead of having what has essentially become a voluntary tax, we create that level playing field by ensuring that all gambling in the UK pays UK tax and the UK levy. Let us also make it a compulsory level playing field.

[Richard Fuller (Bedford) (Con)]

I greatly appreciate my hon. Friend’s giving way, as well as the contributions by my hon. Friends from rural constituencies. I represent an urban centre, and he is making some excellent points about levelling the playing field, because another consequence of the levy falling into disrepair has been onshore betting shops siting gambling machines in their premises, which play to people’s addiction when they are gambling. It has had a detrimental impact on horse racing and played to addiction. Is that not another argument why his proposals are so important?

[Matthew Hancock]

It absolutely is, because bookies who go offshore for tax purposes also go offshore for regulatory purposes, and that means that all the high standards demanded by the British Horseracing Authority are not required of them. There have been instances of poor practice by bookmakers based elsewhere—for instance, in Gibraltar—who fall outside the regulatory practice in the UK. That is not necessarily because the bookie wanted to be outside the regulatory net; rather, they went because of the competitive pressure to reduce their tax and stop paying what had become a voluntary tax and a voluntary levy.

I come to the action that we need in the narrow sphere of offshore gambling. The case for action is strong, but what can we do? I propose a simple solution: we should make the requirement to pay tax and the levy in the UK part of a gambling licence. It is a simple change, but the consequence would be that no serious bookmaker could avoid what has become a voluntary tax, because they would be liable to the law of the land and would be unable to advertise in the UK. Indeed, they would also be unable to come to the UK, because what is currently tax avoidance would become tax evasion. My proposal is for a straightforward change that is being looked at in many other countries. Indeed, it has been enacted in Ireland, and a similar but bigger change has already been put through in France. In any other walk of life, we would not accept an industry choosing not to pay tax by moving headquarters offshore while continuing operations onshore in precisely the same way as before. Why should we allow the gambling industry to avoid tax in that way, when no one in this room could simply choose not to pay their income tax?