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Racing Tipster Backs Winner in VAT Dispute

The tax authorities have suffered a stinging defeat in a highly unusual case which involved in depth analysis of the business relationship between a phenomenally successful racing tipster and the punters who placed bets on his behalf.

The tipster enjoyed such a reputation for picking winners that he had had his account closed by some bookmaking chains. In order to get round that difficulty he had, through his corporate vehicle, established a network of around 40 punters who placed bets with his money before passing back to him any winnings.

In financial terms, the punters neither gained nor lost from the relationship and the only advantage to them was the opportunity to back the same horses as the tipster. On that basis, he argued that there had been no taxable supply to the punters and claimed a VAT rebate in excess of £85,000.

In disputing the claim, Her Majesty’s Revenue and Customs insisted that the nature of the business relationship was that the tipster, by providing punters with the name of his favoured horse, was providing valuable information to the latter in return for payments equivalent to any winnings.

However, in allowing the tipster’s appeal, the First-Tier Tribunal noted that punters ran no risks and would never be out-of-pocket in that it was always the tipster who provided the stake money. It was ‘quite immaterial’ that punters might adopt the tips and place identical bets for their own benefit. The reality was that the tipster was merely using others to place his bets and that any supply of services was by the punters to the tipster’s company.