bitcoin Business

HMRC gives green light to Bitcoin business?

pirate flagThe Telegraph has reported that HMRC will announce that it is to remove the 20% VAT from the sale and trading of Bitcoin in the UK.

Until now Bitcoin has been classified as an electronically supplied service or electronic voucher (depending on which perimeter officer received the query) which meant buying from or trading with a business incurred VAT. This effectively made Bitcoin 20% more expensive in the UK than elsewhere, eliminating any chance for UK businesses to operate in this area.

UK businesses now have the ability to sell bitcoins directly to customers without passing on the 20% VAT charge, making the UK with its financial status probably the most advantageous jurisdiction in the EU to operate a Bitcoin related business. Unfortunately, UK banks have shown very little interest in operating with Bitcoin businesses without specific regulation. They are very risk averse and if the government doesn’t tackle the issue, it may mean the Bitcoin economy will flourish elsewhere at the expense of the UK.

For users of exchanges it is important to note that VAT is being scrapped on all aspects of Bitcoin trading. When you buy or sell Bitcoin on a UK exchange the exchange takes a small fee to facilitate the trade. These fees will now be VAT zero rated, meaning there should be a potential 20% saving on fees for customers and no VAT liability for UK businesses operating trading services.

As a Bitcoin startup we welcome this news and have been pushing for this for nearly 9 months. We met with our local MP Karl McCartney who raised our concerns on this issue in parliament and wrote to the Treasury and HMRC on our behalf. We have also written to members of the cabinet and directly to HMRC ourselves. Hopefully our input alongside the many others who have had similar contacts has raised this issue to the level it deserves.

In all this is great news for the Bitcoin community and we expect to see an influx of startups buying and selling Bitcoins in the UK. The recognition by a UK government agency is an important step towards mainstream adoption and we are now looking to the Financial Conduct Authority to provide UK banks with the regulatory comfort they need to support this fledgling industry.

Other Bitcoin related posts:

Bitcoin Bet of Bubble Bursting?

Silk Road FTTC and Bitcoin

Bitcoin currency crash due to problems at MtGox (sounds familiar)

End User scams security

New phishing attempt doing the rounds under guise of HMRC

It amuses me more than anything to see phishing attempts hit my inbox though it does worry me that I will one day have this uncontrollable urge to click on the link provided.

Today’s, looking as if it had come in from Her Majesty’s Customs and Revenue, was mildly believable.  It is after all coming up to that time of year where we have to think about tax returns.

The message read:
Taxpayer ID: trefd-00000159883557UK
Issue: Unreported/Underreported Income (Fraud Application)

Please review your tax statement on HM Revenue and Customs (HMRC) website (click on the link below):

We caught this spam but it did attempt to get delivered to many Timico employees. For the safety of the reader I haven’t reproduced the link but I’d be mildly interested in a straw poll to see how many people got the email. And how many actually responded to it!

That’s not my taxpayer ID by the way 🙂