Imagine a business in your high street that sells nothing, makes nothing, offers no services and hoovers money out of the local economy. This is a business that is feted and fawned over by politicians because they argue that its vast profits provide the treasury with badly needed tax revenue. In these wintry economic times, so the logic goes, it is important not to overlook any business activity that can help fund schools and hospitals.
Imagine then that this same business puts all its efforts and energies into paying as little tax as is possible, providing the public purse with meager offerings. One might reasonably ask what the point of this enterprise to wider society was.
For the past ten years, Ladbrokes, the betting company, has been in a legal battle with the treasury over a £71 million tax bill. The accountancy firm Deloitte in 2008 helped to exploit legal loop holes to allow Ladbrokes to minimise its tax bill.
It was announced this week that Ladbrokes has lost its appeal at the Court of Appeal to avoid paying the bill. Focus Gaming News reported that:
'...Back in 2008 Ladbrokes along with Deloitte, its auditor, violated a tax loophole that consisted of loans between third parties and corporations with the intention of minimising the tax bill for the entire year. The British company stated that the arrangements were made with the intention to avoid taxes, and that the rules didn’t apply to them. Director General of Compliance at the UK Revenue & Customs (HMRC) Jennie Granger, said: “Ladbrokes would have been better off just paying the tax but instead they pursued this lengthy legal dispute with HMRC.”'
During the longest squeeze in spending on public services in living memory, the gambling industry has deliberately targeted poorer people to exploit. Not content with extracting wealth from the most vulnerable, companies like Ladbrokes have attempted to shirk their part of the social contract, leaving the people they profit from to bear the cost of unpaid tax bills.
