Ladbrokes owner GVC faces probe by UK tax authority

21 July 2020

Ladbrokes owner GVC has stated it is "surprised" the UK's tax body is widening a questions into "possible business upseting" related to its previous Turkish online gambling unit.

It stated HM Revenue & Customs had expanded its probe into suppliers GVC used in Turkey to consist of other entities within its group.

GVC sold its Turkish business in December 2017.

The company stated it was co-operating with examination.

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GVC were informed of the advancement on Monday, but said it had yet to be informed of which of its subsidiaries were being examined.

It stated it was "shocked by the decision to extend the investigation in this way and are dissatisfied by the lack of clarity provided by HMRC regarding the scope of its examination".

"HMRC has not yet provided details of the nature of the yohaig code historical conduct it is examining, with the exception of a recommendation to area 7 Bribery Act 2010, nor has it clarified which part of the GVC group is under examination."

Section 7 states that a commercial organisation is guilty of an offence if a person connected with that business bribes another person to acquire or retain organization, or to get or keep a benefit in the conduct of business.

GVC's share price was down 10.6% to 778.2 p on Tuesday following the news.

The UK Gambling Commission told the yohaig code BBC that it was "helping" with the investigation.

HMRC declined to comment.

In July 2019, GVC was forced to deny reports that it was still gaining from its former Turkish subsidiary, worrying that it no longer had ties with business.

"The board re-iterates the fact that subsequent to the yohaig code disposal of the group's Turkish-facing business, GVC has no activity either directly or indirectly linked to the Turkish market," GVC said.

"Furthermore, the board likewise unconditionally refutes tips that the group, or senior management, continue to gain from any operations servicing the Turkish market."

Liz Coleman, former HMRC tax inspector and expert of advisory firm Integrated Dispute Resolution, stated the examination could go on for a long time.

"HMRC investigations are generally prolonged and thinking about the size of GVC it could be going on for years, although if there's a targeted technique it might be much shorter," she stated.

"They need to analyse all the computer system records too, so this promotion code might add even more time."

The HMRC's decision comes just a week after Kenneth Alexander revealed that he was stepping down as GVC's president.

Mr Alexander took over in 2007 and supervise the company's acquisitions of rivals Ladbrokes Coral and Bwin.party.

GVC reported a 22% drop in overall net profits for the 2nd quarter this year due to the impact of the Covid-19 pandemic.

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