

Britain Will Reportedly Scrap 20% Tax on Bitcoin - amitkumar01
http://techcrunch.com/2014/03/02/britain-will-reportedly-scrap-20-tax-on-bitcoin/

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hackerboos
This article basically confirms what has previously been agreed by HMRC.

The initial problem is that they wrongly classified Bitcoin as 'vouchers'
rather than as a digital currency. Which incurred a 20% VAT charge on the
value of Bitcoin. So users would effectively have to pay 120% of the spot
price to buy Bitcoins in the UK. Now that levy is only chargeable on the
exchange fee (if there is one).

Although this is welcomed news the biggest obstacle still remains for British
Bitcoin based businesses and that is banks. All British banks refuse to do
facilitate Bitcoin related businesses due to it's unregulated status and until
this changes there will not be any 'bitcoin economy' here in the UK.

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zwtaylor
Here's a solid survey of the regulatory treatment of virtual currency in
Britain.

[http://bitlegal.io/nation/GB.php](http://bitlegal.io/nation/GB.php)

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petercooper
What confuses me here is I thought nowadays that VAT law was supposed to be
harmonised with the EU (and hence why VAT law is so complex and full of
bizarre edge cases). It seems the EU should have a policy on this instead that
then filters down to each member state.

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rplnt
What do you mean by harmonized? Some countries have different VAT for
different items, some have flat(ter) VATs, the amounts differ as well.

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petercooper
There are directives that attempt to harmonize many of the policies, though
not the amounts:
[http://en.wikipedia.org/wiki/European_Union_value_added_tax#...](http://en.wikipedia.org/wiki/European_Union_value_added_tax#Sixth_Directive)

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Fuxy
Finally some good news from the UK.

I'm not sure if they did it in good faith or are just underestimating bitcoin
after the recent issues however i welcome the change.

Maybe we can finally start paying for virtual goods in virtual currency and
not have to worry about our card details getting stolen.

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detritus
imho (as someone who used to have a company selling something now illegal in
the UK, but which we pushed to gain a VAT ruling for..) — I suspect they're
doing this less to 'be nice', rather that attributing Bitcoin (or anything
else) a specific VAT status implies a tacit acceptance (read: support) of its
existence by the state. This way they can continue to sit on the fence, safe
in the knowledge that they can tax any profits made within existing the
system, but can wash their hands if and when it all goes tits up.

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k-mcgrady
Applying VAT to a currency seems strange in the first place, no wonder they
are scrapping it. It's also possibly they've looked at the whole MtGox fiasco
and thought it's no worth worrying about Bitcoin anymore and they rethink
regulations when the outcome of the MtGox thing is known.

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matthewmacleod
I'm pretty sure that's the point though - the UK has not yet begun to treat
Bitcoin as a currency, but as a voucher (for which VAT would be due.)

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Ellipsis753
Thank god. Perhaps someone will be able to understand how to legally use
Bitcoins in the UK soon (and then they can explain it to me). I've sold some
Bitcoins in the past but stopped as I have no idea how tax etc works on them
(and can't find out).

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hahainternet
If they're classified as vouchers they are no different to selling anything
that gets VAT lumped on it.

If they're classified as money, then they're capital.

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ars
They probably scrapped it due to the utter impossibility of enforcing it.

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derefr
Many laws aren't on the books because there's any way to positively enforce
them, but rather because they give police and judges a crime to charge people
with when they're doing things you'd _expect_ to be illegal, but are being
very clever about obeying the letter of the law (and bribing the right people
to continue to see things that way.) I can imagine this generation's Al Capone
going down for Bitcoin Tax Evasion.

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blueskin_
Trying to make it look like they're being nice instead of admitting 'we have
zero way to tax this'.

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TheAnimus
That's not true at all.

It will be liable to CGT, (Capital Gains Tax, which is higher than VAT for
those earning more than about $50k per year), it must be declared with your
self assessment.

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blueskin_
Not everyone has to do selfassessment (actually, most people don't).

