Clause 9
Finance (No. 2) Bill
John Healey (Financial Secretary, HM Treasury; Wentworth, Labour)
Thank you, Mr. O’ Hara. The clause amends the scope of the exclusions to general betting duty in existing excise law and it does so with retrospective effect from 6 December last year. It ensures that any bet made using a gaming machine, within the meaning of section 23 of the Value Added Tax Act 1994, is excluded from a charge to general betting duty where VAT is charged in respect of use.
If the clause were not amended, bets made on gaming machines would be excluded from general betting duty only if they were charged with VAT. This means that if the bookmaker providing the machine were trading below the VAT registration threshold, VAT would not be charged and the bookmaker would continue to have to account for the general betting duty on the gross take of the machine. That would put smaller businesses at a disadvantage because general betting duty is charged at 15 per cent., while the net rate of VAT is typically about 12 per cent., which was clearly not what we intended in our pre-Budget report announcement or the drafting of clause 9.
The amendment will ensure the removal of the charge to the general betting duty from all machines defined as gaming machines for VAT purposes, andit is designed to have retrospective effect from6 December 2005. As a consequence of the VAT changes we announced in the pre-Budget report, bookmakers’ fixed-odds betting terminals have become gaming machines for VAT purposes. As it is not the Government’s policy to charge both VAT and general betting duty on the same transactions, we announced in the pre-Budget report that general betting duty would not apply to fixed-odds betting terminals from 6 December. However, the exclusions to general betting duty that are provided by the Betting and Gaming Duties Act 1981 could be amended only by primary legislation, which is what we are doing in the clause. On that basis, I hope that hon. Members will accept the amendment and the clause.