William Hill to Challenge "Illegal" UK Online Gambling Tax Plans

William Hill is looking to legally challenge the UK’s plan to switch to a “point of consumption” (POC) tax for all online gambling, which would require offshore operators to pay a tax on all bets taken from UK customers. The proposal, slated to come into affect at the end of 2014, will affect all online operators including online poker rooms.

According to Monday’s Telegraph, William Hill CEO Ralph Topping has received “encouraging noises” from its lawyers that there would be a solid case against the new system, indicating that it would be illegal under EU law as it restricts the free movement of goods and services for tax purposes.

Nearly all operators moved offshore following the 2005 Gambling Act that requires all UK-based companies to pay 15% tax on all online activity. However, it created a whitelist of offshore jurisdictions where operators could continue to serve and advertise to UK customers and avoid the new levy. Practically all UK operators took advantage of the whitelist and set up operations in the likes of Alderney, Malta and the Isle of Man.

The UK is planning to put a stop to this with a new POC tax that requires operators to pay tax on UK bets, regardless of their location. First proposed back in July 2011, it received mention in the Chancellor’s 2012 budget and a tandem private member’s bill proposes much the same.

A recent report from The Culture, Media and Sport Committee supported the proposed switch to POC, but questioned the high tax levy of 15% and suggested a further review.

Cited in the report was research carried out by Deloitte—on behalf of William Hill—that also supported POC but suggested a 10-15% levy would force many operators to leave the market.