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Friday, May 14, 1999 Published at 11:24 GMT 12:24 UK

Business: The Company File

Betting on Gibraltar

Chandler is racing to beat the tax competition

UK betting firm Victor Chandler International says it will move its telephone betting business to Gibraltar, saving its customers the 9% betting tax and costing the UK Treasury thousands of pounds.

Alex Strutt, spokeswoman for HM Customs and Excise, said the government was not too concerned about a loss of revenue, but added that "we are monitoring the situation".

Instead of the 9% betting tax, punters with Victor Chandler will soon pay only a 3% service charge. The switch will come into effect on Monday.

To complete the move, Chandler will sell its UK telephone business to its Gibraltar-based subsidiary.

Customs and Excise has confirmed that Chandler's move to Gibraltar is perfectly legal. There is just one hitch: The company will not be allowed to advertise for its service.

Mrs Strutt says her department will watch out whether the company keeps to the law.

Tax race

Victor Chandler, calling itself the biggest independent bookmaker in the UK, said it was forced to move to the Gibraltar "tax-haven", because of Irish tax competition.

[ image: Chandler's 'tax haven' in Gibraltar]
Chandler's 'tax haven' in Gibraltar
In July, the Irish Republic will introduce a new, lower 5% tax rate for off-course betting.

Chandler's managing director Michael Carlton said: "It's the only sensible commercial move we can make given the imminent attack the UK industry is set to face when the Irish off-course tax rate falls ... in July."

Tax revenue

According to Customs and Excise figures, the betting tax generated revenues worth 479m during the financial year 1998/99.

Some betting companies have already moved "off-shore", for example to the Isle of Man. However, this has not triggered a drop in tax revenue, according to Mrs Strutt.

She believes that there will not be a lot of tax competition between the UK and Ireland.

The amount of cross-border betting is "not significant", she says.

And Mrs Strutt warns: "There is a high risk of non-payment from off-shore betting operators, which may put off many punters."

End of phone betting?

Victor Chandler is drawing in punters with both on-course betting shops and its telephone betting business.

Unlike Ladbroke, William Hill, Coral, Stanley and others, Victor Chandler International has not got a chain of off-course betting shops to draw in customers.

Mr Carlton predicts that the tax changes in Ireland will trigger a collapse of telephone betting in the UK.

Race fund

Not paying betting taxes would mean bad news for UK race courses, which rely on some of the proceeds.

But Chandler says it will set up a trust to pay a "voluntary levy" directly to the racing industry.

The company forecasts that the levy will generate between 400,000 and 500,000 a year, to be distributed between race sponsorship, prize money and initiatives to develop racing in the UK.

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