In this article, we look at how online gambling is regulated in the United Kingdom. Who needs to get a license? Is it just the ones registered in the UK or does it apply to every gambling service and advertisement targeting British players? Like these online Gambling websites that target players in the UK.

To clarify the tax procedures for operators, let us define the terms used in this article.

• Remote Gaming Duty (RGD) - a duty on income from conducting online gambling, introduced in the UK. The obligation to pay this duty (hereafter RGD) is governed by the Finance Act.
• Online gaming (remote gaming) - a gambling activity where the goal is to win a prize through online or remote means (e.g., via the internet).
• United Kingdom (UK) - this excludes the Isle of Man, the Channel Islands, and Gibraltar.
• HM Revenue and Customs (HMRC) - the UK tax authority.
• Remote Operating Licence (ROL) - a license issued by the UK Gambling Commission.
• Gaming prize fund or pool - the fund or pool in which all payments for remote gaming are collected and from which prizes are paid.

Tax Reform and Remote Gaming Duty

The government of the United Kingdom has announced gambling tax reforms that will now tax remote gambling according to the "place of consumption."

Under the new tax regime, remote gambling operators will be required to pay a portion of their gross profits derived from gambling activities offered to British players, no matter where on Earth the operator themselves are based.

The RGD rate has been raised from 15% to 21%.

This tax applies to all gambling payments received from British players.

Gaming payments refer to the total sums paid by individuals from the UK.

Determining a UK Person

To understand who qualifies as a British player (UK person), we need to establish the criteria:

• A person who usually resides in the United Kingdom;
• A corporate entity legally formed in the United Kingdom.

The UK tax authority has provided guidance on how to determine if a person is a UK resident:

1. Record Keeping: Game providers must maintain proper records to verify if their players are UK residents (i.e., they usually live in the UK or abroad). Providers are responsible for keeping their client location records up to date. These records must be available for audit by HMRC.

All game providers will need first to require players to state the address at which they normally live. If there are no details, the player will automatically become a UK person.

2. Verification: If a player provides an address outside of the UK, game providers must verify the stated location using other information in their systems. It is unacceptable for providers to simply accept players' statements about their residence as facts. When the verification system produces conflicting results, the operator must verify the following:

• Bank statement address;
• Credit card address;
• Driver’s license address;
• Contact phone number with an attached country code.

If there are at least two indicators that denote an identification address from the UK, then it is considered the operation would assume the person to be a UK resident, irrespective of the address that the player may provide. This is known as the two UK indicators rule.

Registration and Compliance

If you plan to operate in the UK market, you must register with the tax authority immediately.

It is necessary to apply for registration no later than 31 days before the date needed. This is shortened to 14 days for those businesses based in the UK, EU, Gibraltar, Isle of Man, Norway, Faroe Islands, Iceland, New Zealand, or South Africa.

Online registration is the only option available for RGD registration. No option for paper registration is available.

The UK allows you to appoint an agent to handle, on behalf of the company, payment of fees and taxes, and reporting.

If operators are not registered in a group (where several related companies have one that is registered in the UK) or if they are not located in any of the jurisdictions mentioned above, they are also required to appoint a representative.

Reporting and Penalties

After registration, operators shall submit reports. As a rule, the reporting period is 3 full calendar months starting from the 1st day of the very first month until the last day of the 3rd month. The report has to be submitted not later than 30 days after the end of the reporting period. The unopened submissions attract penalties.

Ensuring Compliance and Tax Collection

In accordance with policies to recover tax debts owed in other jurisdictions, HMRC cooperates with other jurisdictions, including under the framework of the EU Mutual Assistance in the Recovery of Debt (MARD) directive and the automatic exchange of information.

Thus, by making the decision to provide services to UK residents, you will surely need to obtain a license and enter into one of the largest gambling markets in the UK.