Online system to receive gambling tax registrations not yet operational as deadline approaches

From 1 December, remote gambling operators will have to pay a 15% duty to HM Revenue and Customs (HMRC) on betting, pool betting and remote gaming activities carried out by customers who usually live in the UK regardless of where those operators are based in the world. Currently, operators based outside the UK do not have to pay any gambling taxes in the UK.

New guidance issued by HMRC has explained that gambling operators that are already registered for tax in the UK will be automatically registered for the new 'point of consumption' tax regime. However, HMRC said it would be writing to those businesses seeking additional information to input during the transfer of their details to the new IT system that is underpinning the new registration and submission system for gambling taxes.

Gambling operators based outside the UK and not already registered for UK tax will have to proactively register for the new tax regime with HMRC. Businesses which are subject to the new tax regime but fail to register face unlimited fines or the loss of their licence to operate in Great Britain.

Remote gambling operators must ask customers whether they usually live in the UK – and verify the information that they provide.

The new tax regime is being created alongside, but separately from, a new regulatory and licensing framework for remote gambling in Great Britain. The new framework, which is the subject of a legal challenge, would, if introduced, require gambling operators to obtain a licence from the Gambling Commission in order to to provide remote gambling services to consumers in Great Britain.

In its latest guidance, HMRC has explained that applications for registration to the new tax regime from gambling operators that are not already registered for gambling tax in the UK must be submitted online by operators that hold or are required to hold a remote operating licence under the planned new regulatory and licensing regime.

HMRC said that applications must generally be submitted 31 days before the start of the taxable activities, so 31 days prior to 1 December for businesses intending to operate from the day the new tax comes into force.  However "for businesses based in the UK, EU, Alderney and Guernsey, Gibraltar, the Isle of Man, Norway, the Faroes, Iceland, New Zealand or South Africa" applications can still be submitted up to 14 days before the start of taxable activities.

However, with the respective 30 October and 16 November deadlines approaching, the online application system for registering for the new tax regime is not yet operational. An August announcement issued by HMRC said that online registration would be available from "early autumn". In its latest note, HMRC said it the system will open "soon" and that it "will publish guidance on how to register before the registration service opens".

Under the new tax regime, some offshore remote gambling operators liable to pay betting, remote gaming or pool betting duties may have to appoint a UK-based fiscal representative with at least a three year UK trading history and to use the new online system to submit tax returns on their behalf. Alternatively those operators can offer security and appoint an administrative representative to perform the same task.

The 'representative' obligation does not apply if operators are based in the UK or EU or in selected other jurisdictions, including jurisdictions where the UK has struck agreements with local agencies regarding the enforcement of "gambling tax debts". The representative obligation also does not apply if the operator is a member of a group which has made a group registration and has another member whose principal place of business is in the UK.

Gambling law expert Susan Biddle of Pinsent Masons, the law firm behind Out-Law.com, said: "Any representative must be a body incorporated in the UK, with a trading history of at least three years, and has to be approved by HMRC which will take into account criminal records, UK tax compliance and liquidity. The amount of security required is likely to be six months’ estimated duty, and this obligation can be met by a deposit or by bank guarantee, performance bond or a joint account with HMRC."

"A fiscal representative is jointly and severally liable with the operator for its tax, and HMRC will require it to have liquidity similar to the security which would be required if the operator opted for an admin rather than a fiscal representative. The approval process is expected to take three weeks, and the nomination process can be started before the registration process is complete so operators may want to get on with doing this – so far as they can if the online system is not yet operational," Biddle said.

The HMRC's latest guidance confirms that it has come to gambling tax enforcement agreements with authorities in Gibraltar and the Isle if Man and that "good progress is being made with discussions with Alderney".

Separately, the Gambling Commission has issued a new advice note to gambling operators (8-page / 120KB PDF) on their obligations to report suspected money laundering activity under the planned new regulatory and licensing regime.