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HMRC internal manual

Admin Law Manual

What this means in practice: Example 3 - general betting duty, financial detriment

An on-course bookmaker writes to HMRC to say he currently operates a betting office but is planning to close it. Once the office is closed, he will only operate on-course, though he will also be accepting some telephone bets. He asks for confirmation that he can cease to make general betting duty returns and need not pay general betting duty once he has closed his shop. This treatment is confirmed in writing and he stops paying duty and submitting returns.

During a compliance event six months later, the officer examines the situation and again confirms in writing that the trader need not pay any general betting duty.

A year later, the bookmaker’s accountant prepares the annual accounts and during the course of this advises the bookmaker that the information from HMRC was incorrect and he has been liable to pay general betting duty. The amount of duty underpaid is £19,000 and the bookmaker requests that the tax not be charged as he was acting on HMRC’s advice.

In this example, the customer asks for clear advice, provides the full facts, receives an unambiguous response, which is repeated at a later date by HMRC, and acts on the advice by no longer paying duty. He takes bets and calculates odds on the basis that no duty would be due and he is not able to identify his clients to attempt to collect the duty from them. He would suffer financial difficulty, possibly going out of business if required to pay it, so he would incur real detriment if we sought to apply the law correctly.

It is therefore reasonable to assume that for HMRC to apply the law correctly and collect the tax underdeclared would be so unfair to this customer as to constitute an abuse of power. The tax is remitted. The true tax position is confirmed to the customer in writing so that the correct declarations and payments are made for the future.