Finance

Ladbrokes loses HMRC appeal, handed £71m tax charge

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Ladbrokes has failed in an appeal to HM Revenue & Customs (HMRC) in the UK to overturn a ruling over a bogus tax avoidance scheme and has been ordered to pay £71 million (€83.7 million/$88.4 million).

Ladbrokes has failed in an appeal to HM Revenue & Customs (HMRC) in the UK to overturn a ruling over a bogus tax avoidance scheme and has been ordered to pay £71 million (€83.7 million/$88.4 million).

In December 2015, HMRC won a judgment against Ladbrokes worth £54 million after the bookmaker admitted to setting up a deal between two of its divisions that led to a share price drop in one of the operations, thus allowing the other to claim a tax loss.

The arrangement, which was overseen by Deloitte, exploited a 2008 tax loophole that related to loans between corporations and third parties, although this has since been closed.

HMRC launched legal action against the 100 companies that took advantage of the loophole, including Ladbrokes, which appealed against the initial ruling and said it had done nothing wrong.

However, the Upper Tribunal of the Tax and Chancery Chamber disagreed with the claim and dismissed each of Ladbrokes’ three arguments, ordering the firm to pay HMRC a total of £71 million.

Upon confirmation of the news, HMRC compliance director Jennie Granger said:
“Ladbrokes would have been better off just paying the tax but instead they pursued this lengthy legal dispute with HMRC.

“Avoidance schemes like this just don’t work and HMRC will always take firm action against them.

“The bookie gambled and lost when the odds of success could not have been lower.”

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