Denise Coates’ charity may have saved Bet365 more in tax than it has given to good causes

A charity set up by the billionaire boss of Bet365, Denise Coates, may have saved her online gambling empire more in tax than the foundation has yet given to good causes, Guardian analysis suggests.

The Coates family are among Britain’s biggest taxpayers, and contributed an estimated £376m to the exchequer in 2023 via business and personal taxes. That includes Bet365’s corporation tax bill and levies on Denise Coates’ record-breaking wages and dividends.

But corporate filings suggest that the Bet365 empire has also significantly reduced its tax bill, by as much as £140m over more than a decade, as a result of rules that tax experts said should be reviewed.

Companies in the Bet365 group have injected £752m into the Denise Coates Foundation since 2013, when the charity was set up, according to its accounts.

The foundation has donated just over 10% of that sum over the same period, distributing an average of £7.8m a year to causes including a hospice, cancer research, the arts and education for disadvantaged people.

Over the decade-long period, the foundation has managed to amass a fund of £730m but handed out £78m. The majority of the money given to the foundation, mostly by companies in the Bet365 group, has yet to be distributed.

Campaigners at TaxWatch questioned why the Denise Coates Foundation needed to accrue such huge reserves and whether it was right for tax relief to be linked to sums that have not yet been distributed to good causes.

Coates became Britain’s richest woman after capitalising on the rise of the internet to transform her father’s Stoke-based bookmaking business into a worldwide digital gambling empire.

She is known for her record-breaking pay-and-dividend deals of up to £469m a year but is also among Britain’s biggest taxpayers and has directed some of Bet365’s profits into her charitable foundation.

The Denise Coates Foundation has previously said that it needs to build up large reserves so that it can be self-sustaining in the long term, rather than relying on continued contributions from the company.

But the strategy may also have resulted in Bet365’s tax savings from philanthropy outstripping the sums received by good causes, analysis suggests.

Companies that make a donation to charity are permitted to deduct the same sum from their taxable earnings, a form of tax relief designed to encourage businesses to fund worthy causes. Bet365 group companies may have collectively received £140m of tax relief by putting money into the Denise Coates Foundation, according to Guardian analysis of corporate filings submitted to Companies House over 10 years. That sum is almost twice the amount the foundation has handed over to good causes.

Corporate filings also suggest that donations may have been shifted between companies under the Bet365 umbrella – which includes more than 70 subsidiaries – in a way that optimised the tax savings.

Between 2017 and 2022, group company Hillside (Technology) Ltd donated between £20m and £55m to the Denise Coates Foundation every year, a total of £235m in donations.

But in 2023, when Hillside made a loss, meaning that it had no taxable income, its donations stopped. Funds were instead sourced from other divisions that had remained in profit, reducing their tax bills instead.

This, said one expert, was a legitimate strategy that would have the effect of ensuring that Denise Coates’ philanthropy was as tax-efficient as possible.

Ray McCann, a former president of the Chartered Institute of Taxation and a former senior inspector at HMRC, said there was a “public interest” in tax relief on charitable donations.

“Where a group of companies is concerned, it is possible for different companies in the group to claim to ensure relief is not lost due to a lack of profits in a particular year. There would be no reason to regard such situations as wrong or against the rules.”

But the campaign group TaxWatch questioned the fairness of rules that permit a company to claim tax relief by donating to a foundation before that foundation actually hands out the money.

It said the arrangement should be subject to even greater scrutiny because the trustees of the Denise Coates Foundation are all members of the Coates family or employees of the Bet365 group. The foundation has no independent trustees.

“The way the rules currently work means that tax relief can be claimed much earlier than we think it should be and potentially more relief than should be available,” TaxWatch said.

“This case demonstrates the need to reform the rules to only allow relief for the amounts actually paid over to the independent charity for charitable activities.

“The rules can and should be changed to remove this distortion and improve the interrelationship between our tax rules and how registered charities are funded and report their activities.

“For a vast sum of over £700m to be sitting in an endowment fund not being used for any charitable purpose is wrong, especially when the charity is controlled by trustees who are the same key management of the donor company.”

The Coates family did not comment.