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Thoughts on POCT

The following is my most recent column for GIQ Magazine which came out this week.

 

I was asked by someone the other day what chances the industry’s mooted Judicial Review (JR) of the plan to introduce a Place of Consumption Tax had of success. You could say it’s an odd question to ask someone who isn’t a lawyer; but in fact, it’s precisely because I’m not a lawyer that I was being asked.

The reason for that is that it’s an interesting question to consider from a lobbying perspective. The difference, of course, is that a lawyer winning the battle can claim an unqualified success, whereas for a lobbyist, the battle’s result might just prolong what could become a horribly bloody war that the client may ultimately lose.

Let’s first consider the legals, from a layman’s perspective. As I understand it, you can JR the Government for any of three reasons: illegality (that the Government has not correctly understood the law that regulates its decision-making power, or given effect to it); irrationality or unreasonableness, which means that whatever the Government did was “so outrageous in its defiance of logic or of accepted moral standards that no sensible person who had applied his mind to the question could have arrived at it”; or on the grounds of procedural impropriety, which is largely self-explanatory.

The second of those is hard to argue in the context of the current tax evasion debate. The gambling industry sits largely offshore to avoid paying a duty that cannot be levied on international competitors targeting its domestic audience. This is a world away from what might be called the Starbucks strategy, which involves ascribing the full value of a brand’s IP to shell companies with the same name in order that they can charge a fee to those in the jurisdiction that actually has some customers. But unfortunately, the distinction is intricate, and unlikely to be understood by the public at large even at the best of times. With neither the media nor any Westminster party too enamoured with gambling, these are not the best of times.

A JR win would therefore have to come from one of the two more technical legal grounds. I have no doubt that is possible, but the big question is what would happen next. The answer will depend on what you consider the motives are for the government acting in the first place.

If POCT is being introduced on the basis of principle – a leveling the fiscal playing-field, the argument goes – then the natural response of Government would be to try again, either (in the event of procedural impropriety) without making the same mistake, or (if it has acted illegally) having changed the relevant bit of law. Fighting an adversary which has Primary Legislation in its armoury is a tough gig.

If it’s about money – Government is, after all, expecting the measure to plug £300m of the hole in its finances – the industry might well be wise to look before it leaps: there are plenty of other ways to raise revenues, and hell hath no fury like an Exchequer thwarted.

None of which is to say either that the POCT makes sense, or that there aren’t significant changes to it that should be brought in. The obvious truth is that a 15% GPT drove almost everyone out of this jurisdiction in the first place: that is precisely what is making the POCT the current policy of choice. Simply extending the reach of an inappropriate tax won’t suddenly make it one that people don’t seek to avoid. And unless the Government recognises that, it will soon – just like the rest of Europe – lose control of the industry.

Posted in Betting industry, Europe.

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Continuing the Discussion

  1. I was just the reviewer… | Mark Davies linked to this post on August 18, 2013

    […] I’ll return to it in September… But I haven’t the will to pen anything about Place of Consumption Taxes in August even if the government has now published its summary of responses to its consultation […]

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