Clause 6 - General betting duty and pool betting duty: relief for losses
Finance Bill
10:15 am
Mr John Healey (Economic Secretary, HM Treasury; Wentworth, Labour)
I am grateful to the hon. Gentleman. As it happens, I published a report yesterday containing the results of the review, so I can bring him and the Committee bang up to date by summarising one or two of its main findings.
The report shows that since the reform, betting shops have experienced an increase in turnover of 82 per cent., almost half of which is attributable to the gross profits tax. It shows that 2,000 jobs have been created in the industry in the UK, and that internet and niche gambling sectors have had a significant
boost—the previous duty on stakes was a greater burden to such small operators because their margins were tighter, so that is a significant gain from the new system. The report also shows that the benefit of betting offshore or illegally, which was a serious problem for the industry, has been removed and that the level of illegal bookmaking has been significantly reduced. Finally, it shows that international business appears to be drawn to the UK. Although it is still too early to quantify, at least one large chain has reported a 10 per cent. increase in overseas sales since the introduction of the gross profits tax.
None the less, because the review threw up some questions from the industry for the Government, we are taking the opportunity it provides to make some further improvements to the new regime. We are doing that through this clause and the related clauses 7 and 8. At present, if a bookmaker makes a loss over an accounting period, although no duty is payable because no profit is made, that loss cannot be carried forward to the next accounting period to be offset against future profits. During the review, some smaller bookmakers and spread betting firms argued that, when they made a loss over an accounting period, the lack of a carry-forward facility meant that over a year they paid a higher effective rate of duty than 15 per cent. on their gross profits over the year as a whole. Having considered the merits of the bookmakers' argument, the Government have decided to refine the betting provisions to allow them to carry forward losses between accounting periods. For consistency, the arrangements also apply to pool betting operators.
I hope that the Committee will realise that the clause demonstrates the Government's commitment to consult, to listen to the industry, to respond when there is good evidence and a good case is put to them, and to refine the regime accordingly. On that basis, I commend the clause to the Committee.