Bookmakers have to pay income tax the same as anyone else. Sometimes they have good days, and sometimes they have bad days, but on average they make a profit or they wouldn’t be in business at all. The Revenue allow them to offset the losses which they make on bad days against the profits which they make on good days, which is only fair considering the nature of their activity.
Now suppose the bookmaker makes £30,000 profit, and also has income from renting property also totalling £30,000. The Revenue will add these together to make £60,000 and levy both income tax at the standard rate, and surtax at the higher rate, on the combined amount.
Suppose that in a subsequent year, a loss is made on renting property. This cannot be offset against trading income from bookmaking. In other words, the Revenue will aggregate income when it suits them, but avoid doing this when it doesn’t suit them. Is this fair?
Not every part of the taxation system is necessarily fair in the ordinary way. We have accountants, tax advisers and sometimes solicitors to help defend business against some of the arbitrariness that may occur. Demagogic politicians who rant on about fair taxes should remember this.
David Porthouse & Co is a forward-looking firm of accountants based in Carlisle with a keen interest in new technology with the aim of speeding up accounts production and making accountancy more affordable for our clients.