Double Taxation Relief for gambling duties

1.Introduction

1.1 Background

Double Taxation Relief (DTR) provides relief from double taxation for General Betting Duty (GBD), Pool Betting Duty (PBD) and Remote Gaming Duty (RGD) in certain circumstances where tax has been paid in the UK and in another country on the same remote gambling transaction. DTR is available for accounting periods ending on or after 1 April 2012.

1.2 What is this notice about?

This notice explains the DTR provisions that apply to the gambling duties. It also (at Annex A) lists the qualifying foreign taxes currently specified for the purposes of the relief.

2. Double Taxation Relief (DTR): Outline

2.1 What is double taxation relief?

Double Taxation Relief (DTR) is a relief available to a person who is liable to pay a UK gambling duty and has paid a qualifying foreign tax on the same remote gambling transaction.

2.2 Which UK gambling duties are eligible for the relief?

General Betting Duty (GBD), Pool Betting Duty (PBD) and Remote Gaming Duty (RGD).

2.3 What is a qualifying foreign tax?

It is a foreign tax specified by the Commissioners for Her Majesty’s Revenue and Customs (HMRC) in Annex A to this Notice 456.

2.4 Where can I find the list of specified foreign taxes?

They are published in Annex A at the end of this Notice 456.

2.5 Can I claim DTR for a tax not on the list of qualifying foreign taxes?

No.

2.6 How do I ask HMRC to add to the list of qualifying foreign taxes?

You may apply to HMRC to have a foreign tax included on the list of qualifying foreign taxes. Applications must be made in writing and include a copy of the legislation, an English language translation of that legislation, and any relevant background information.

HMRC will consider your application against the conditions set out in section 10A (for general betting duty or pool betting duty) and section 26IB (for remote gaming duty) of The Betting and Gaming Duties Act 1981 which defines “qualifying foreign tax”. These include that:

• it is a gambling tax
• the activities on which it is charged include betting or remote gaming
• the bets or remote gaming in respect of which it is charged include bets or remote gaming in respect of which GBD, PBD or RGD is also charged, and
• the charge in respect of such bets or remote gaming is based on betting or remote gaming by persons in or deemed to be in the country or territory where the tax is imposed.

2.7 What is a gambling tax for the purposes of the definition of a foreign tax?

Indicators that a foreign tax is a gambling tax include that:

• it is charged on activities involving betting or gaming (rather than activities generally), and
• it goes towards meeting general public expenditure (rather than being ring-fenced for a particular purpose).

A foreign tax will only be considered for inclusion in the list if it meets the conditions shown at paragraphs 2.6 and 2.7 above.

HMRC may update the Notice specifying foreign taxes with retrospective effect. If a tax were to be included under this provision it is possible that a DTR claim could be submitted with similar retrospective effect. The earliest claim that could be made would relate to an accounting period ending on or after 1 April 2012.

3. Applying for and calculating DTR

3.1 How do I claim DTR?

You need to make a separate claim on form DTR 100 Gambling Duties: Double Taxation Relief for each of the following duties against which you wish to claim DTR:

• GBD on fixed-odds bets
• GBD on pool bets on horses and dogs
• GBD on financial spread bets
• GBD on other spread bets
• GBD as a betting exchange
• PBD
• RGD.

You also need to make a separate claim for each (non-UK) territory for which you are claiming DTR.

Example:

A bookmaker in the UK provides fixed-odds bets and ‘other’ spread bets to both country A and country B and incurs double taxation on the same transactions in both countries. This would result in four separate claims, as follows:

• Fixed-odds bets in country A
• ‘Other’ spread bets in country A
• Fixed-odds bets in country B, and
• ‘Other’ spread-bets in country B.

3.2 Are there circumstances when you will not grant relief?

Yes, even if a claim is correct, HMRC will not accept a claim for relief if you have gambling duty returns outstanding.

3.3 How much DTR will I receive?

The amount you are entitled to claim will be the lower of the notional UK liability and the notional foreign liability. Your total repayments against a UK duty cannot exceed the amount of duty that you have actually paid.

3.4 What is notional UK liability?

It is the amount of UK duty you would be liable to pay calculated by reference to eligible bets of a particular class. A class of bets refers, for example, to general bets subject to duty at 15 per cent. Another class would be financial spread bets subject to duty at 3 per cent and so on. Within the class, eligible bets are those that have been subject to both UK and a qualifying foreign tax.

3.5 How do I calculate notional UK liability for the purpose of the DTR?

Use the same UK tax rate and basis of calculation that you use for the relevant UK Gambling Duty.

Example:

A bookmaker in the UK accepts fixed-odds bets from customers in country A:

Received stakes = €1m

Minus winnings paid out = €900k

Total net stake receipts = €100k

Notional UK liability: (Net stake receipts x UK GBD) = €100k x 15% = €15k.

3.6 What is notional foreign liability?

It is the amount of qualifying foreign tax you would be liable to pay if the tax were charged solely in respect of eligible bets or gaming. Eligible bets are those which have been subject to a qualifying foreign tax and UK duty. You must calculate the tax by reference to your accounting periods for the purposes of the relevant UK duty.

You must report your stakes, prizes and gross profits separately for each qualifying foreign tax (however, if two or more qualifying foreign taxes share both the same rate and basis of calculation you may report them as if they were the same duty).

Example:

If foreign country 'B' charges (a) a 2% tax on stakes for bets on football and (b) a 20% tax on profits for bets on other sports, then both (a) and (b) should be reported separately in claiming DTR.

3.7 How do I calculate notional foreign liability for the purpose of DTR?

Use the same foreign tax rate and basis of calculation that you use for transactions charged with the foreign tax and apply it solely to eligible bets or gaming.

Example:

A bookmaker in the UK accepts both football bets and other sporting bets from customers in 'B'. The notional foreign liability must be calculated separately for football bets and sporting bets:

Football bets:

Received stakes = €300k

Minus winnings paid out = €250k

Total net stake receipts = €50k (gross profit for football bets)

(Note that the above two lines are included for completeness only and are not required to calculate notional foreign liability.)

Notional foreign liability = €300k x 2% duty = €6k.

Other sporting bets:

Received stakes = €700k

Minus winnings paid out = €650k

Total net stake receipts = €50k (gross profit for sporting bets)

Notional foreign liability = €50k x 20% duty = €10k

€6k + €10k = €16k - Total notional foreign liability for the accounting period.

3.8 Do I need to make periodic reconciliations?

Yes. A reconciliation period for DTR claims is:

• 4 quarterly accounting periods,
• 12 monthly accounting periods, or
• As close as possible to 365 days - made up of non-standard accounting periods.

The reconciliation period starts with the first accounting period in which you are eligible to claim DTR.

3.9 How do I treat losses in calculating notional UK liability?

When can I carry forward losses?

You must carry forward any losses from previous accounting periods, for the purposes of calculating notional UK liability.

Example:

If the bookmaker in the above example had generated negative net stake receipts of €60k on fixed-odds bets in country A in the previous accounting period, this loss may be carried forward and deducted from future profit.

Received stakes = €1m

Minus winnings paid out = €900k

Total net stake receipts = €100k

Losses carried forward from previous accounting period = €60k

Balance for Duty Calculation = €40k

Notional UK liability: (Balance for Duty Calculation x UK GBD) = €40k x 15% = €6k.

3.10 Are there circumstances when losses cannot be carried forward for the purposes of calculating notional UK liability?

You may not carry forward losses for the purposes of calculating notional UK liability:

• when making your first DTR claim, (ie you cannot carry forward any losses into the first accounting period), or
• from one reconciliation period to the next.

3.11 How do I treat losses in calculating notional foreign liability?

You must carry forward any losses from the previous accounting period within your claim, providing the foreign territory allows this.

When making a claim, you may not carry forward losses into the first accounting period, or from one reconciliation period to the next.

3.12 How should I treat losses from the preceding period when calculating both the Notional UK Liability and the Notional Foreign Liability in the current period?

Please see example. We have assumed that the foreign territory does not allow for losses to be carried forward for bets on football (where the territory taxes stakes), but does allow losses to be carried forward for other bets (where it taxes profits).

3.13 Are there circumstances in which you will be required to repay all or part of the DTR claimed? (clawback)

Yes.

If you receive a repayment within a reconciliation period and, in the final accounting period in that reconciliation period record a negative net stake receipts or net pool betting receipts figure, or a remote gaming loss, then you must repay some, or all of, the repayments received in the reconciliation period.

3.14 How much would I have to repay?

The lower of:

• the loss multiplied by the rate at which the qualifying foreign tax is charged in respect of eligible bets or gaming,
• the loss multiplied by the appropriate UK duty rate for the applicable betting or gaming, or
• the repayment (or the sum of the repayments) made to you for the reconciliation period
• if all or part of the qualifying foreign tax is calculated other than on a net receipts basis, the repayment will be the smallest of the loss multiplied by the appropriate UK duty rate, or the repayment or the sum of the repayments made to you for the reconciliation period.

Example:

A UK bookmaker receives bets from customers in Country ‘C’. The bookmaker is liable to pay General Betting Duty (GBD) at 15% on these bets. Country ‘C’ also taxes the bookmaker at 20% of net stakes on the same bets. Country 'C' allows losses to be carried forward.

The profit figures shown below are those profits generated from transactions with customers in 'C' (eligible bets).

Note that the loss in Q2 reduces the notional foreign liability and the notional UK liability in Q3, as losses are carried forward in both territories.

The negative balance for duty calculation in Q4 means that the clawback provisions apply. The bookmaker is required to repay the lower of the following three amounts:

a) UK duty on the loss = 15% × €50k = €7.5k

b) The sum of repayments made during the reconciliation period = €15k + €7.5k = €22.5k

c) Foreign duty on the loss (this does apply as the foreign duty is calculated on the basis of net receipts) = 20% × €50k = €10k

So in this case the claimant would be expected to repay €7.5k and the loss of €50k would not carry forward into the following quarter in either the UK or the foreign calculations.

Note that the total profit generated from these transactions in Qs 1-4 is 100 and the total relief given is €15k (after clawback). Therefore the sum total of relief claimed would be the bookmaker’s duty contribution from these transactions.

3.15 Are there other circumstances in which I may have to repay relief?

Yes, if:

• you have made an error
• the way the qualifying foreign tax is charged or calculated is changed retrospectively
• a tax authority waives or refunds all or part of an amount of qualifying foreign tax due from you, or
• as a result of being liable to pay an amount of qualifying foreign tax, you (or a connected person) become entitled to any kind of tax deduction or relief calculated by reference to the amount of qualifying foreign tax.

In any of these circumstances, you must re-calculate your relief claim and notify HMRC.

4. Further information on making a claim

4.1 When can I submit a claim?

You must make a claim within one year of the later of:

• the end of the accounting period in which the entitlement to make the claim arose, or
• the date on which the qualifying tax was paid.

4.2 What sort of documentary evidence do I need to submit to back up my claims?

You must submit your claim on form DTR 100 Gambling Duties: Double Taxation Relief together with evidence:

• of payment of a qualifying tax to an overseas territory, for dutiable transactions in the UK
• of UK duty paid for each class of transaction with customers in the overseas territory
• of stakes received for a class of bet in an overseas territory, and
• of winnings paid out on a class of bet in an overseas territory.

4.3 How long will it take to process my claim?

If we are satisfied with the evidence provided, we will aim to process your claim within a month from its receipt.

HMRC may make payment at a later date if additional evidence or information has been requested in connection with the claim. Payment of a claim does not necessarily indicate that it has been approved.

Your rights and obligations

Your Charter explains what you can expect from us and what we can expect from you. For more information go to Your Charter.

Do you have any comments or suggestions?

If you have any comments or suggestions to make about this notice, please write to:

HM Revenue & Customs
Gambling Duties Team
Excise, Customs, Stamps and Money
3rd Floor West
Ralli Quays
Stanley Street
Salford
M60 9LA

Please note this address is not for general enquiries.

For your general enquiries please phone our Helpline 0845 010 9000.

Putting things right

If you are unhappy with our service, please contact the person or office you have been dealing with. They will try to put things right. If you are still unhappy, they will tell you how to complain.

If you want to know more about making a complaint go to hmrc.gov.uk and under quick links, select Complaints and appeals.

How we use your information

HMRC is a Data Controller under the Data Protection Act 1998. We hold information for the purposes specified in our notification to the Information Commissioner, including the assessment and collection of tax and duties, the payment of benefits and the prevention and detection of crime, and may use this information for any of them.

We may get information about you from others, or we may give information to them. If we do, it will only be as the law permits to:

• check the accuracy of information
• prevent or detect crime
• protect public funds.

We may check information we receive about you with what is already in our records. This can include information provided by you, as well as by others, such as other government departments or agencies and overseas tax and customs authorities. We will not give information to anyone outside HMRC unless the law permits us to do so. For more information go to hmrc.gov.uk and look for Data Protection Act within the Search facility.

Annex A

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