HM customs and excise: Gambling duties

Abstract

This report examines Customs' progress on the recommendations in the light of the main developments in the gambling industry since 2000, specifically: The protection of gambling duty revenues (Part 1); The use of resources to target risks to gambling duties (Part 2); and Customs' response to the changes in the gambling industry (Part 3). Conclusions: Customs has implemented most of the recommendations of the Committee of Public Accounts' report on gambling duties of 2000. Work by Customs on measuring the tax gap10 is now due to be completed by 2006. Customs deferred this work to allow for changes arising from the Gross Profits Tax reform in 2001 to take effect. Customs' risk assessment and effective use of resources has been hampered by the lack of regular feedback of the results of its assurance activities. Customs has addressed this by centralising staff resources and records and by introducing a management assurance programme to ensure consistency of the quality and nature of information obtained. Customs is starting to develop a better understanding of the risks posed by remote gambling to target its work accordingly and prevent revenue loss. On the basis of a wider analysis of risks across excise duty streams, Customs has allocated fewer staff resources to gambling duties. Recommendations:To implement the Committee's recommendations from 2000 in full, Customs should complete the work underway to establish an estimate of the tax gap for general betting duty by 2006. To make better use of information it obtains on traders to assess risks to revenue, target its resources and ensure trader compliance, Customs should strengthen the management of its assurance work on gambling duties. To encourage traders to comply with their duty return and payments obligations, Customs should review the use and scale of penalties for late returns. This needs to be taken forward in the context of the wider review of the new HM Revenue and Customs Department's penalty policy which is looking to establish a common set of penalty principles and a penalty framework. To enhance Customs' risk assessment and targeting of resources to reflect the growth in new forms of gambling business, Customs should further develop its risk assessment of gambling duties. With the growing diversity of the gambling industry, Customs should work with other bodies, especially the proposed Gambling Commission, to share information, pool expertise and target activities on high-risk traders.

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