Does the tax gap shrink by £1 billion then?

And if not, why not?

Bookmakers are in line for a £1bn tax rebate after a court ruled they were wrongly charged VAT on revenue from controversial fixed-odds betting terminals (FOBTs).

The finding, in a case brought against HM Revenue & Customs by the high-street bookmaker Betfred, will be seen as a major victory for an industry reeling from the government’s decision earlier this year to slash the maximum bet on FOBTs from £100 to £2.

A tax tribunal ruled that collecting VAT on FOBTs between 2005 and 2013 had “breached the principle of fiscal neutrality” because similar roulette-style games played in casinos and online were exempt from the tax.

Note what the ruling is. That £1 billion of tax already paid is not righteously due under current law. Therefore that calculation of what the tax gap is must be reduced, no? For it is – supposedly – the amount righteously due but not paid, something which must clearly be offset by that not due but paid.

And how much other tax is being over collected?

12 thoughts on “Does the tax gap shrink by £1 billion then?”

  1. Logically, though, if you have a shortfall (the tax gap) and an overcharge somewhere else, then they net unless the overage is handed back, in which case the gap is unchanged. Maybe the better approach is to assume there’s always an overage of whatever, and net that off, and use this one as an example. Since both numbers would be estimates, more or less wild depending on the sanity of the guesser, that seems fair.

  2. “And how much other tax is being over collected?”

    An interesting thought.

    Spud constantly bleats that the tax gap should include tax which isn’t collected when people quite legally do things which ‘parliament didn’t intend’ (aka which Spud doesn’t like).

    So surely some account should be taken of people who pay too much tax when they don’t do something parliament intends, such as not saving in a pension or ISA, buying energy inefficient P&M and so on.

  3. I passed through Ely on the train to and from Norfolk this week. Really looks like a lovely little place. Just a pity that a cvnt like Murphy lives there.

  4. Andrew C

    Remember he has that covered. Under the Courageous state there will be no ISAs or other such savings products allowed because they discriminate against those who have no savings. The state will be the sole supplier of all goods so there will be no inefficiencies.

    To quote from Burke:

    ‘in that country, to entirely cut off a branch of commerce, to extinguish a manufacture, to destroy the circulation of money, to violate credit, to suspend the course of agriculture, even to burn a city, or lay waste to a province of their own, does not cause them a moment’s anxiety. To them the will, the wish, the want, the liberty, the toil, the blood of individuals is as nothing. individuality is left out of their scheme of government. The state is all in all’

    Looking at Murphy and the likes of Ivan Horrocks, Howard Reed, Andrew Dickie and a whole host of hobgoblins on TRUK- can anyone not argue this is as true of their monstrous vision today as it was 250 or so years ago?

  5. @ Tim
    Why not, you may ask?
    Well, because the “Tax Gap” quoted is a figment of Murphy’s imagination so reality has no impact on the number quoted.

  6. Bloke in Costa Rica

    At least 50% of tax is over-collected, because it’s used to pay for things that it shouldn’t be. The tax gap is about -£350 billion.

  7. Legally, not righteously.

    That which is legally owed is less than that which is righteously owed*

    You’ve reduced the legal bill; doesn’t follow that righteous bill is reduced too.

    * L<R – Dave C's equation

  8. ‘“breached the principle of fiscal neutrality” because similar roulette-style games played in casinos and online were exempt from the tax.’

    Is that a UK or a European principle? As it’s VAT, we’re orobably talking the latter aren’t we. So, if we were to have a proper Brexit, these amounts could again become righteously due again. Personally, I would be quite happy to our government bring these gambling monsters to heel without big hindered by the EU.

  9. I thought I’d see this in the comments somewhere by now. Technically, isn’t the VAT that has been ‘over-charged’ incident on the silly punters who played the FOBTs in the first place? Why should the bookies get the money? If it cannot practically be returned to the punters then HMRC should keep it. The new ruling should be applied going forward surely?

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