Pannick In Court As Gibraltar Challenges UK Tax Laws

With the newly announced Google-Tax remote gambling service providers are facing a squeeze, but then they already have been, and Gibraltar is challenging it

Back in the 1980s George Cole, in the sublimely comic reflection of Thatcher’s Britain that was “Minder”, played the always optimistic entrepreneur, second hand car salesman and dealer in goods of a slightly dubious, if legal, provenance, Arthur Daley. Typically to be found in the company of his guardian heavy Terry McCann, or perhaps propping up the bar in “The Winchester” with a vodka slimline, the variety of his business enterprises was only dwarfed by the trouble they got him in.

This was, it has often been argued, merely a later incarnation of the Flash Harry character he played in the now somewhat suspicious St. Trinians movies of the 50s & 60s. Both had the same spirit of the slightly shady deal about them, although Arthur tended to stay away from school girls in stockings and suspenders, but whilst in the carefree school days of those uniformed terrors Harry feared merely the police, criminal bookmakers and the fourth form, Mr. Daley had a somewhat different worries.

Gibraltar Challenges HMRC
• Case concerns Finance Act of 2014
• Act denies unfettered service provision
• Lord Pannick QC leading team

Despite numerous occasions of physical danger, some ghastly moments of financial loss, and indeed a few runs ins with the local constabulary, Arthur Daley lived in constant fear of but one organization that he seemed to feel was forever right behind him waiting to pounce. It was an organization that he referred to simply as “The Vat Man” (in reference to V.A.T. or Value Added Tax) but these days is more typically referred to as Her Majesty’s Revenue & Customs, at least by those people who pay up.

Now it is very easy to look upon the modern day taxation offices of our various nations as huge monolithic bureaucratic nightmares, an ever shifting collection of regulations, complications and audits, ever more difficult to get to grips with even as they ‘streamline’, ‘simplify’ and go online. However at the moment I suspect many of them are gambling news from the alps will keep the report from the Public Accounts Committee from seeing the light of day on the mainstream media.

MPs Report Critical Of HMRC

In essence the report claims that HMRC has a “cosy” relationship with the major accounting firms and do very little in pursuit of the massive tax evasion undertaken by major corporations tending to fixate instead on far smaller fish. It was also noted that the present government of the UK had introduced so many different tax breaks – up from just 100 to over 1,100 – that it was all but impossible to keep track of them all with any degree of accuracy and loopholes abounded, loopholes used every day.

“We are not persuaded that HMRC and the Crown Prosecution Service are doing enough to prosecute serious tax evasion cases.” Stated the report flatly. “For as long as the United Kingdom has such a complex tax code opportunities for aggressive tax avoidance and evasion will continue to be exploited.” It continued, finally adding, perhaps just a tad spitefully, that; “HMRC must urgently transform its currently unacceptable levels of customer service.”

Obviously in an attempt to blunt this stinging criticism the HMRC and Treasury have announced that there will be a new 25% levy on funds artificially funneled from the UK offshore to avoid taxation.
“I can confirm we are working with five other tax authorities to investigate and challenge how digital multinationals shift their profits to tax havens.” Said David Gauke alluding to the so-called “Google-Tax” that was so interestingly announced in last week’s budget.

This is a seemingly popular move from a government in a dead heat race just forty days out from an election, but whilst it might appear like a worthy effort, you can’t help but feel the accountants will still be one step ahead, and it wasn’t like there weren’t already issues before this was announced. Gibraltar, for instance, was already in the process of challenging the taxation regulations as they pertain to UK gambling laws. They are attending a session at the Royal Courts Of Justice to take on the HMRC.

Don’t Pannick! Don’t Pannick!

The Gibraltar Betting & Gaming Association has taken HMRC to court over it’s Finance Act of 2014 which stipulates that companies offering remote gambling services in the UK are subject to a point-of-consumption tax. This is being challenged on the seemingly sensible basis that this tax regime is incompatible with the requirements of the European Union’s laws that guarantee unfettered provision of services across the borders of the countries therein. Sadly sense and indeed the law won’t come into it.

There are several nations in Europe whose stance on gambling, particularly internet gambling, isn’t entirely in harmony with the European ideal, and much as the central EU bureaucracy stamps its foot and writes angry reports about it, very little progress is made towards enforcing those nations to provide the freedoms they signed up to. Those that like to bet on sport in the UK can do so on sites like Bet365, which is based in Gibraltar, and I’m sure Denise Coates has her eye on the hearing in London.

This close to an election the chance of the Gibraltar team getting a ruling in its favor are nearly as remote as their gambling operations, with the best they can hope for being a referral to the Court of Justice of the European Union, which would be fine with a government that kicks cans down the road as if it were going to be made illegal. HMRC might not win the fight in the end, but with the end far enough away and the new Google-Tax possibly replacing it at the other end of the cycle, why worry?

HMRC and the British government will rely on EU inertia to stave off what it will see as a minor attack, but for Gibraltar to continue to enjoy the lucrative business residents it has acquired, it will have to beat back this flagrant abuse of EU law, take on the vat man and win at whatever cost, or face some remote gambling operators to reassess the need or cost effectiveness of being remote in the first place. Perhaps it is thus entirely apt that Gibraltar’s team is being led by a QC named Pannick, Lord Pannick.