|
By:
catfloppo - under some interpretations of the current ancient case law, you could already be liable for tax... since the precedent seems to treat layers as bookies, and thus bookies as carrying out a trade, and thus taxable
just because the HMRC currently interprets the law a certain way doesnt mean as much as you think... HMRC guidance is NOT law, merely one attempt to interpret it the lack of exchange-specific precedent does not mean there is no precedent for backing and laying, which ultimately is all people do on betfair isnt it |
|
By:
but yes, i agree that the HMRC taking an interest is unlikely for reasons already stated
unfortunately, unlikely is not the same as impossible |
|
By:
Which law is it that repealed the 10p tax on betting?
|
|
By:
subversion 23 Dec 10:09
but yes, i agree that the HMRC taking an interest is unlikely for reasons already stated unfortunately, unlikely is not the same as impossible Exactly. Which brings us full circle and back to the point on which I got so much abuse. It is incorrect to advise others that profits generated from betfair or not potentially liable to tax. |
|
By:
The Betfairy 23 Dec 10:10 Which law is it that repealed the 10p tax on betting? It will be the Finance Act 19__ summink. |
|
By:
Alex the old wrinkled retainer 23 Dec 10:11
Exactly. Which brings us full circle and back to the point on which I got so much abuse. It is incorrect to advise others that profits generated from betfair or not potentially liable to tax. well i'm glad i managed to come to the same conclusion independently. guess this part-time Law degree isn't a total waste of time after all since it was only a few months ago that i started the study, i can still remember what it was like to be a 'man in the street'... and so i can see clearly why a lot of the posters on this thread are confused and making mistakes about what is actually 'LAW' and what is merely guidance, empty language or interpretation the fact that the revenue/govt have no interest in the current state of affairs has simply no bearing on what the LAW would have to say should they decide to take an interest, for whatever reason |
|
By:
Taken from the racing post on 24/10/2004 :
Busines Matters: Racing & the tax man: Tip of the week: Profits from exchanges are all yours Published: 24/10/2004 (Sport) Julie Butler FROM now on, I will be addressing frequently asked questions in the field of taxation, as they apply to matters in the racing and betting industries. So here goes. . . Q: I was a licensed bookmaker and now I just play the exchanges. Do I have to pay tax on my exchange profits? A: Licensed bookmakers pay tax, but pro punters do not. Even if pro punters lay horses on the exchanges, this is not taxable. However, if bookmakers use (or integrate) the exchanges into their trade as a bookmaker, then this is taxable. If a licensed bookmaker ceases trading as a bookmaker just to play the exchanges, again this is not taxable. However, there must be clear cut-off for both the Inland Revenue and Customs & Excise. It is suggested that clearance with these authorities is obtained. Q: I earn my living playing the exchanges, but back this up with some self-employed work. Do I have to pay tax on all the earnings (including the exchanges) or just the self-employed earnings? The profits (and losses) on the exchanges are tax-free. Income tax is only payable on the self-employed earnings. It is, however, suggested that full records are kept and the 'additional information' section of the tax return is noted with very brief details of the exchange activity. Every individual has to agree their own position with the tax inspector and sources of extra exchange profits might need explaining. - Julie Butler FCA is the author of the LexisNexis Butterworths Tolley title Equine Tax Planning. ISBN: 0406966540. To order a copy call 020 8662 2000. Email: address supplied |
|
By:
I looked at a prospectus for an unaccredited correspondence course in Law so I am also no longer "the man in the street".
Unfortunately, I decided my field of expertise is Maritime Law and piracy on the High Seas so I will have to defer to my learned friend on this issue. :^0 |
|
By:
can that Julie Butler woman (or anyone on this thread) offer a definition of 'punter', in the context of the very complex backing and laying strategies employed by many on exchanges, with reference to existing case law or statute?
because the HMRC certainly doesnt, in any of its guidance it merely refers to ancient case law that concludes anyone who backs horses at starting prices is a punter... and those who are layers or who, "calculating the odds in the case of various horses over a long period of time and quoting them so that on the whole the aggregate odds |
|
By:
unless of course your betfair strategy doesnt involve any laying or trading
|
|
By:
I suppose this may come down to Betfair's argument that it is a bookmaker.
|
|
By:
http://www.hm-treasury.gov.uk/cande1.htm
C&E1 General betting duty abolished A radical reform of betting duty, which will create the right competitive environment for British-based bookmakers to develop their business domestically and internationally, and give punters a better deal, was announced by the Chancellor today. Under the new system, the current General Betting Duty of 6.75 per cent on total stakes will be replaced with a 15 per cent tax on bookmakers? gross profits, defined as the difference between the stakes laid with them and the winnings they pay out. This reformed tax structure makes it possible for bookmakers to absorb the tax and to end the 9 per cent 'deduction' that they currently charge on stakes, which means that punters will pay no tax. It therefore makes it possible for UK bookmakers to develop their domestic and international business from an onshore base, competing from a position of strength in the growing global market for telephone and Internet betting. As a result of the changes announced today, the largest UK bookmakers have said that they will relocate their offshore operations to the UK. They expect to take advantage of the new duty system, the UK's reputation as a centre of bookmaking integrity and expertise, and the skilled staff and IT infrastructure that is available from a UK base to grow their e-commerce businesses, bringing international business and increased employment opportunities to the UK. The extra domestic and international betting turnover the reform will generate should enable both the betting and racing industries to prosper. Government revenues will share in the gain from increased turnover in the medium term. ... How the Gross Profits Tax will work Under the current system, a punter placing a bet pays an additional charge of 9 per cent on his stake, representing: 6.75 per cent tax; approximately 1.25 -1.5 per cent horse race levy (where appropriate); and a residual deduction for bookmakers' administrative costs. Under the new system the customer should pay no deductions when placing the same bet. The tax charge, horse race levy and administration charges should be absorbed by the bookmaker. |
|
By:
In other words, unless the government of the day wants to drive the betting industry offshore it will not re-introduce the betting tax. Also, so long as Betfair can win the argument that it is a bookmaker (it does have a bookmaker licence after all), then we are all "punters".
I feel safe for now, at any rate. |
|
By:
i feel fairly safe too Betfairy
but it is important to note, especially those whose living relies on this, that the existing body of law is pretty badly inadequate any laws that we can refer to with close to 100% certainty are still to be argued and decided and as you say, a lot of it will hinge on thrashing out exact technical definitions... such as 'what is a punter (in the context of the very complex exchange environment)', 'is Betfair a bookie', etc etc etc so we probably have nothing to worry about, but i'll still feel a lot safer if they can nail down some proper LAW rather than mere assumptions and guidance |
|
By:
Alex the old wrinkled retainer 23 Dec 10:07
There used to be a tax loophole by living in Belgium when a major capital gain was in the offing. A loophole in Belgian tax law and the double taxation treaty. Despite millions being at stake only one person actually relocated of the people I advised. The rest just decided to pay up and stick with their life in the UK. I advised a couple of clients who went over to Belgium, only one managed to stick it out though - the other returned after 6 months. The problem was the 5 years that you needed to stay over there for. |
|
By:
2001.
I was guessing at much earlier than that. |
|
By:
Was it really 5 years? I thought it was 3 but I eventually came to hate advising on tax so I am maybe blocking the details out.
|
|
By:
Think so, although my memory is hazy too - there were other countries available too that sounded a lot nicer than Belgium but I guess as Belgium is the closest then that was the one most chosen
|
|
By:
The Betfairy 23 Dec 11:28
I feel safe for now, at any rate. If my understanding of what you do it correct then I would feel safe in your position. Governments very rarely introduce retrospective legislation. The people that need to be worried are the ones that don't gamble at all and just make books. |
|
By:
JamesBlakesHugeArse 23 Dec 11:39
Think so, although my memory is hazy too - there were other countries available too that sounded a lot nicer than Belgium but I guess as Belgium is the closest then that was the one most chosen Ah there a big hoo ha about this. Belguim had a CGT exception and despite pressure from other EU countries they refused to change their laws. Basically they wanted cash rich foreign nationals in their country. |
|
By:
Alex the old wrinkled retainer 23 Dec 11:41
The people that need to be worried are the ones that don't gamble at all and just make books. i think the nightmare scenario is a very clued up HMRC insider who fully understands the whole spectrum of exchange strategies, from 'risky' punting to nearly 'risk-free' such a making books, arbing, skimming etc and then tries to draw this distinction in a court of law |
|
By:
i definitely agree with your earlier comment Alex - it would be a fascinating debate to be involved in, on an intellectual level
|
|
By:
arbers in theory could be in trouble, however it doesnt take much imagination to turn an arber into a gambler
|
|
By:
thats the problem isn't it JamesBlake - the exchange platform has totally blurred the lines, and the law simply hasn't kept pace
|
|
By:
tax potential would be peanuts compared to Big Business loop holes
|
|
By:
If Betfair's operations are governed by a bookmakers' licence I find it very difficult to believe that any one of us, no matter what technique employed, is not a customer of a bookmaker as described in the legislation. In other words, if Betfair pays the tax, the customer doesn't. Can it really be more complex than that?
|
|
By:
Can it really be more complex than that?
Yes. And I think that you have gone off on a tangent. |
|
By:
Okay.
|
|
By:
Betfairy - our winnings and losses are from others punters though aren't they... so immediately the waters are muddied
|
|
By:
According to Betfair it's not; Betfair match the bets, we don't match with each other. That's what they say, anyway, and I have no means to do so outside of the Betting Exchange system. So I am customer of a bookmaker.
|
|
By:
'according to Betfair' is irrelevant - Betfair are not the law
|
|
By:
subversion 23 Dec 11:49
Alex the old wrinkled retainer 23 Dec 11:41 i think the nightmare scenario is a very clued up HMRC insider who fully understands the whole spectrum of exchange strategies, from 'risky' punting to nearly 'risk-free' such a making books, arbing, skimming etc and then tries to draw this distinction in a court of law They may do it that way. The Taxes Management Act allows the provision of information. (If it is still called the TMA.) So they can go to betfair and ask for information and then make a judgement on what the tax take could be and then simply advise the politicians to change the law. But people that are simply making books and not gambling, in my view, are already within the tax net. |
|
By:
Alex - rather than advising the politicians to introduce statutes in future, could they not argue, as you have suggested for people making books, that these 'non-risky' activities are taxable under EXISTING common law principles?
based on the ridiculously outdated case law? |
|
By:
If bookmakers are paying tax on behalf of the customer, and the customer is now also liable for tax, then surely the bookmaker needs to rebate the customer, else the customer is, in effect, being taxed twice.
|
|
By:
subversion 23 Dec 12:05
Alex - rather than advising the politicians to introduce statutes in future, could they not argue, as you have suggested for people making books, that these 'non-risky' activities are taxable under EXISTING common law principles? based on the ridiculously outdated case law? Yes. Just based on tried and tested tax law on what constitutes a trade with a view to a profit. We don't need to go to an isolated 1926 Tax Case. There are stacks or precedents for that. It becomes much more difficult if somebody is making books and gambling. |
|
By:
They are only paying betting tax not income tax
|
|
By:
** of
|
|
By:
Good point - the distinction gambling duty and income tax.
|
|
By:
Betfairy - if you sell me some shares on the LSE, i have to pay stamp duty, you have to pay capital gains tax, we both have to pay exchange fees (and the exchange gets taxed on its revenues), etc etc...
the government has no qualms about multiple taxes being levied on business models like this, does it |
|
By:
Alex the old wrinkled retainer 23 Dec 12:17
It becomes much more difficult if somebody is making books and gambling. thats pretty much what i was referring to - bookmaking has plenty of specific precedent, whereas probably 'non-risky' arbing, skimming, market-making etc have far less specific precedent (when talking about gambling anyway - plenty of precedent for these activities in financial markets, no doubt) so could these other 'non-risky' activities be caught by existing case law? if i worked for HMRC, and they deemed it something worth pursuing, i reckon a decent case could be constructed couldnt it |