Business Bulletin 05 Mar 2017
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Ladbrokes lose £71m tax avoidance case
Ladbrokes have lost a long-running legal battle with the taxman, costing them £71 million.
The bookmaker attempted to minimise their corporation tax bill by adopting a scheme promoted in 2008 by accountants Deloitte that exploited a legal loophole that has since been closed.
It involved two companies in the Ladbrokes group, Ladbrokes International and Travel Document Service, entering into purposely designed arrangements so that an artificially manufactured fall in the value of the shares in one of the companies generated a loss for the other company for tax purposes. The group suffered no real loss overall.
Ladbrokes conceded that the arrangements were intended to avoid tax but argued in court that anti-avoidance rules did not catch them out
Jennie Granger, HM Revenue and Customs’ director general for customer compliance, 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.”
Ladbrokes declined to comment.
Commission figures suggest fall in confidence
Figures released by the Gambling Commission last week appeared to show a fall in confidence in the fairness of the gambling industry among consumers.
Only 34 per cent of Britons believe gambling is conducted fairly and can be trusted according to the report, with the finger of blame pointed at concern over terms and conditions.
The figures were revealed in the Gambling Commission’s gambling participation report for 2016, the data for which was gathered through a combination of telephone and online surveys carried out by market research company Populus.
The figure for those who agree gambling is fair and can be trusted represents a fall from 48.8 per cent in 2008 when the survey was first carried out.
“These findings could be linked to consumers’ concerns about the fairness of terms and conditions,” the report said.
The Gambling Commission and Competition and Markets Authority are investigating unfair terms and conditions in online gambling and those surveyed were asked why they felt terms were unfair.
The top three areas of concern were having to wager a certain amount before being able to claim a prize/winnings, unfair limits on free bets and it being too difficult to win or in the company’s favour.
While 48 per cent of people surveyed had gambled in the previous four weeks – a figure that drops to 33 per cent after stripping out those just playing the National Lottery – 78 per cent of respondents felt there are too many opportunities to gamble, while 69 per cent feel gambling is dangerous for family life.
Nevertheless, 67 per cent of those surveyed said they thought people should have the right to gamble whenever they want.
Among the survey’s other findings was that 0.7 per cent of those who have gambled in the past 12 months identified as problem gamblers, compared to 0.5 per cent in 2015.
Gambling Commission programme director James Green said of the report: “Effective protections come from strong evidence. Our research puts us in a powerful position to better understand the needs of gambling consumers.”
Sportech to sell off pools company
Pool betting company Sportech last week finally agreed to sell their Football Pools company to private investment company OpCapita in an £83m deal.
A £100m sale of the business to Burlywood Capital, a private equity fund set up by Sportingbet founder Mark Blandford along with former investment banker Andrew Burnett, fell through late last year.
The company, formed through the combination of predecessor brands Littlewoods, Vernons and Zetters, will remain on Merseyside and move into new premises in Liverpool city centre.
Sportech chief executive Ian Penrose said: “The sale of The Football Pools business represents an important strategic development for Sportech, having established a strong platform for growth, following completion of an extensive and successful modernisation programme.
“We have delivered our objective of stabilising earnings, and are delighted to have concluded this deal for Sportech’s shareholders, The Football Pools business and its employees.”
OpCapita chairman John Von Spreckelsen said he was delighted to have acquired a business “which occupies a unique place in British culture”.
He added: “Sportech has successfully modernised the business and we look forward to realising its significant growth potential.”
The announcement came as Sportech unveiled their final results for 2016. Revenue was down two per cent to £98.6m, with overall ebitda (earnings before interest, taxation, depreciation and amortisation) up three per cent to £23.8m
The board said it would also return approximately £20m to shareholders by way of a tender.
Penrose added: “The group is now in a strong position and more focused to take advantage of the strategic positioning of its predominantly US-based businesses. We look forward to delivering further progress in 2017.”
What’s happening this week
Paddy Power Betfair unveil their preliminary results on Tuesday. In January the company guided that underlying ebitda was expected to be around the midpoint of their previous guidance of £390m to £405m.
Analysts at Morgan Stanley said they would focusing on “top-line momentum and merger progress”.[/vc_column_text][vc_separator][/vc_column][/vc_row][vc_row][vc_column][bsf-info-box icon=”Defaults-envelope-o” icon_size=”32″ pos=”left”]For more information about Racing Post’s B2B services, contact us or browse more of b2b.racingpost.com.[/bsf-info-box][vc_column_text]Racing Post B2B caters for all digital content requirements across web, mobile, tablet and retail. But we are more than just a data provider – we enhance raw data with the best and most recognisable content authored by the biggest names in sports betting. Racing Post B2B offers an unrivalled worldwide content portfolio for bookmakers and media associations. Acknowledged throughout the racing and gaming industries, the Racing Post creates bespoke products suited to your audience that will enable your company to maximise profitability by offering unique data, editorial or multi-media solutions.[/vc_column_text][/vc_column][/vc_row]