FINANCE BILL 2001
CLAUSE 6 : GENERAL BETTING DUTY
INTRODUCTION
1. This clause and Schedule 1 make provision for changing the basis upon which the amount of general betting duty is calculated and expand the scope of the duty. The changes are intended to take effect no later than 1 January 2002.
DETAILS OF CLAUSE
2. Clause 6. The clause provides that Schedule 1 shall have effect and also for commencement in accordance with such provision as the Commissioners may make by order made by statutory instrument.
DETAILS OF SCHEDULE 1
3. Schedule 1 of this Bill is divided into four paragraphs.
Paragraph 1 replaces Sections 1-5 of the betting and Gaming Duties Act 1981 with new sections 1-5D. The new sections 1-5D are explained below:
4. Section 1 imposes a new charge to general betting duty.
5. Section 2(1) charges general betting duty on bets made with bookmakers in the United Kingdom.
6. Section 2(2) defines the exceptions to section 2(1).
7. Section 2(3) prescribes the rate of general betting duty, 15 per cent, that applies to bets charged with duty in accordance with s2(1) above. This rate shall be charged against the bookmaker's net stake receipts in each accounting period.
8. Section 3(1) makes provision for the charging of general betting duty on spread bets when they are made with a permit holding bookmaker in the UK.
9. Section 3(2) defines a spread bet for the purposes of general betting duty.
10. Section 3(3) prescribes different rates of general betting duty for financial spread bets and other spread bets. Financial spread bets will be charged at 3 per cent of a bookmaker's net stake receipts. All other spread bets will be charged at 10 per cent.
11. Section 3(4) delineates a financial spread bet from other spread bets for the purpose of general betting duty.
12. Section 3(5) makes provision for Customs to make an order providing that a specified matter is to be treated as a financial matter or make an order providing that a specified matter is not to be treated as a financial matter. They make such an order for the purpose of section 3(4) above. Because the definition of a financial spread bet in section 3(4) depends on identifying the subject matter of the bet as financial, specifying whether a particular matter is, or is not, a financial matter determines the issue of whether a bet relating to that matter is a financial spread bet.
13. Section 4 charges general betting duty on other forms of betting at an amount equal to 15 per cent of a person's net stake receipts. These are:
- sponsored pool betting
- bets made through facilities provided by the Horserace Totalisator Board (The Tote); and
- bets made by means of certain on-track totalisators.
By way of clarification, while totalisator betting on horse races and dog races is a form of pool betting it is subject to a charge to general betting duty rather than pool betting duty so as to be treated on the same basis as fixed odds betting with bookmakers on the same events.
The provisions of this section do not apply to on-course bets, which are exempt from general betting duty, or coupon betting, which is liable to pool betting duty.
14. Section 5(1) introduces the definition of a person's net stake receipts for an accounting period as the total amount due to him for each class of bets made with him in that accounting period, minus the total amount of winnings paid out by him for each class of bets made with him in that period i.e. (money due - winnings paid).
15. Section 5(2) For bets other than spread bets, where the amount a bettor can lose is known when the bet is made , that amount shall be regarded as being due for the purpose of determining the amount of bets made under section 5(1)(a) regardless of whether it has actually been paid.
16. Section 5(3) provides that no general betting duty will be charged if the amount of net stake receipts is zero or a negative amount.
17. Section 5(4) prevents any reductions being made when calculating the aggregate amount of money due in respect of bets made in any period. If a bookmaker requires a customer to make any separate payment to secure an entitlement to make a bet he shall account for the aggregate sum paid or due to be paid by the customer, not merely the part that might be designated as the stake.
18. Section 5(5) makes provision for the notional value of any ?free bets?, or the value of any discounts offered, to be included when calculating the amount due in respect of bets. It follows that any winnings paid out in respect of such ?free bets? will be included in the calculation of net stake receipts.
19. Section 5(6) expands on section 5(1)(b) and provides that the calculation of amounts paid as winnings shall include the payment of winnings to a customer's account. . Additionally, this section allows for the return of customers? stakes to be regarded as winnings (this will void any duty liability if e.g. an event is cancelled) but in either case only payments of winnings in money can be taken into consideration: non-monetary prizes cannot be used to reduce the net stake receipts.
20. Section 5(7) This section ensures that the provisions relating to the calculation of net stake receipts apply equally to those persons providing facilities for making the types of bets described at s4(1)-(3).
21. Section 5A deals with ?multiple? bets and makes a distinction between those that are treated as one bet and those that are treated as a series of bets. Bets caught by s5A(1) and (2) are regarded as a series of bets with stakes and winnings to be accounted for at each stage while bets excepted from subsections (1) and (2) by s5A(3) are regarded as a single bet with only one stake and one lot of winnings to be accounted for
22. Section 5B deals with the liability to pay general betting duty.
5B(1) makes provision for the duty to become due at the end of each accounting period. For bets made with a bookmaker, 5B(2) makes the bookmaker the person responsible to pay the duty that has become due under 5B(1). While the bookmaker is responsible for payment, 5B(3) allows for the recovery of duty from (a) the holder of the permit for the business, (b) the manager of the business, or (c) a director, if the bookmaker is a company. For bets made by way of sponsored pool betting, or by means of facilities provided by the Tote, or by means of certain on-track totalisators, 5B(4) provides that the duty shall be paid by the person who provides the facilities.
The provisions of Section 5B are without prejudice to any Regulations made under paragraph 2 to Schedule 1 of the Betting and Gaming Duties Act 1981 for the administration or enforcement of general betting duty.
23. Section 5C introduces the concept of ?bet-brokers? ?bet-takers? and ?bettors?. The provisions of this section apply where-
(a) a bet-broker, in the course of business, facilitates the making of bets between a bettor and bet-taker, and
(b) the bet broker, in the course of business, makes a bet with a bet-taker as the agent of a bettor.
24. Section 5C(2) makes provision for bet brokers to be regarded as bookmakers for the purpose of general betting duty when they facilitate the making of bets between others. When bets are made via a bet broker, the bet broker is deemed to step into the shoes of the ?bet taker? (ie the person offering odds about an event) and calculate the net stake receipts as if the bet had been made with him and as if he had paid out the winnings himself.
25. Section 5C(3) describes the situations where 5C(2) does not apply. In these situations the provisions of Section 5C(4) will come into force. 5C(4) prevails if:
(a) the bet-taker holds a bookmaker's permit, and
(b) if the bet had been made by the broker with the bet taker the bet would be an off-course bet by reason of the fact that the bet-taker is not on-course.
26. Section 5C(4) makes provision to hold both the bet broker and the bet taker liable to general betting duty at the same time. Under 5C(4) the bet broker and bet taker shall calculate their net stake receipts on the basis of -
(a) the amounts due to be paid by the bettor, and
(b) the winnings paid by the bet taker.
This subsection is intended to prevent bookmakers from avoiding their duty liability by operating via a broker thereby passing their liability to the bet broker.
27. Section 5C(5) provides that Section 5C shall not apply to pool betting, or to bets made via the facilities offered by a person holding, and relying on, a betting agency permit issued under the terms of the Betting Gaming and Lotteries Act 1963 - the holder of such a permit is not allowed to accept bets on his own behalf.
28. Section 5C(6) provides that, in cases where there is doubt as to which party is the bettor and which is the bet taker, the person who was first to offer the bet via the bet broker shall be regarded as the bet taker.
29. Section 5D defines an accounting period for the purpose of general betting duty as a calendar month, or any other period specified in Regulations made by Customs for the administration or enforcement of general betting duty. Such regulations may make provision to general or specific persons or classes of person, for different purposes and for transitional arrangements.
30. Schedule 1 Paragraph 2 amends section 6(1) of the Betting and Gaming Duties Act 1981 to reflect the newly substituted sections 1-5D introduced by this Bill.
31. Schedule 1 Paragraph 3 amends s9(3) of the Betting and Gaming Duties Act 1981 to reflect the newly introduced sections 1-5D.
32. Schedule 1 Paragraph 4 removes paragraph 2(4)(b) and (c) to Schedule 1 of the Betting and Gaming Duties Act 1981. Adequate powers regarding record keeping are found elsewhere in the customs and excise Acts.