why is betting VAT exempt

Really2

zappahey wrote: »

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I never understood why people thought it made more sense to pay the tax up front, as the effect is exactly the same. It seems to be based on a fixation with the cash amount being handed over, ignoring the fact that if the tax was used as the stake then the overall outcome would be identical.

I suppose
£1 + 9% £1.09, Wins £100
£1 (don't pay tax), Wins £100 = £91

So if you win you are worse off, but you have to win otherwise it was tax free losing.

JasonLVC

ninky wrote: »

so how come they charge the VAT equivalent in other countries? for example according to this australia charges GST on betting. they must have the same internet / offshore issues. generali you might know more about this?

http://www.ato.gov.au/businesses/content.asp?doc=/content/11991.htm

GST is not an exact equivalent of VAT (it operates slightly differently) and many non-EU countries have either GST or VAT but in the EU, the member states are bound by the EU Directives for VAT which is what the UK operates under.

lvader

Tax on horse racing used to work, sort of, it did complicate things a bit. But how the hell would you tax a blackjack bet?

ninky_2

JasonLVC wrote: »

Electronic downloads are standard rated supplies so VAT will be charged on downloading music from websites such as Amazon.

A book in printed form is zero rated, but if you buy the same book as an electronic download for your Kimble/Sony Reader, then it will be standard rated as you are not buying a book, you are buying electrnoic data.

Go figure?

so if downloads can be taxed online why not betting? are there not the same offshore issues with companies that provide downloads as with gaming companies?

lvader

It's a numbers game, the odds are stacked in favour of the betting company but only by a very small margin, just enough to ensure the company always profits in the long run but good enough for the punter to be able to win in the short term. Adding 9-10% tax would mean the chances of winning become unrealistically low. Also in couldn't possibly work in real casinos where money changes hands very quickly with no aid from computers.

kennyboy66_2

lvader wrote: »

It's a numbers game, the odds are stacked in favour of the betting company but only by a very small margin, just enough to ensure the company always profits in the long run but good enough for the punter to be able to win in the short term. Adding 9-10% tax would mean the chances of winning become unrealistically low.

While this is true, I would say there were far more people in bookmakers plaving bets 20 years ago when tax was on than now. At least 1/2 the bookies in the country would close without the FOBT terminals.

Nosht

lvader wrote: »

Tax on horse racing used to work, sort of, it did complicate things a bit. But how the hell would you tax a blackjack bet?

The tax would be on the stake money.


N.

zappahey

Really2 wrote: »

I suppose
£1 + 9% £1.09, Wins £100
£1 (don't pay tax), Wins £100 = £91

So if you win you are worse off, but you have to win otherwise it was tax free losing.

Oh, I see, you're right. Assuming that you spend the same total amount up front:

£1 stake + 9% tax = £1.09, wins £100
£1.09 stake (no tax), wins £109 - 9% tax = £99.19

nedmundo

JasonLVC wrote: »

Those days are long gone terryw.

A partially exempt business (one which makes both exempt and VATable sales) has to perform a partial exemption calculation and depending upon certain conditions which I'll not go into for brevity sake, they'll only be able to reclaim a small proportion of their input tax, not all of it.

Used to work for dentists as well who make exempt supplies of healthcare (so not VAT recovery) but they'd sell £2.50 worth of toothbrushes and then try and say that this VAtable part of the business meant they could reclaim the VAT on the overheads of the business such as rent/gas, etc. Can't do that anymore and as recently as last year, the big optician firms have been losing in court as well.

(the eyesight test bit is done at the back of the shop in a tiny room whereas the taxable sales are done in the showroom which is gigantic but they cannot do this anymore either as the split between floor areas is unfair to HMRC). That's why those rooms are so small, it boosted their input tax recovery levels).

Sorry, but that is complete and utter bullocks.:rotfl:

Kronkston_2

ninky wrote: »

can anyone explain the logic of this to me?

and if we need to increase tax revenues wouldn't this be a good place to start?

You would just kill the industry if you had to pay a 20% tax on the stake. A better place to start is to end tax relief on top rate pension payments.