UK Tax Authority HMRC Rethinks Stance on Bitcoin

HM Revenue and Customs has backtracked on its previous classification of bitcoin as a taxable 'voucher'.

Dec 6, 2013 at 5:00 p.m. UTC
Updated Sep 10, 2021 at 12:03 p.m. UTC

HM Revenue and Customs (HMRC – the UK customs and tax department) has backtracked on its previous classification of bitcoin.

Last month, it was revealed that HMRC had decided to classify bitcoins as vouchers, which meant that VAT would be due on sales involving the digital currency.

Today, members of the UK bitcoin scene visited HMRC today to speak with the government department about cryptocurrency.

Tom Robinson from BitPrice, bitcoin entrepreneur Michael Parsons, Marc Warne from Bittylicious and Eitan Jankelewitz from Sheridans law firm were present at the meeting. Robinson said:

"We started off by explaining bitcoin to them – a lot of the meeting involved educating them about bitcoin and what it's actually used for."

He went on to say that the department, after hearing this, said it would withdraw its previous guidance about bitcoin being a type of voucher.

"The general feeling I got from the meeting was that they don’t think VAT should be levied on the bitcoin value itself," Robinson added.

He described this as a really positive move as, under the current guidance, it is completely unviable for bitcoin vendors and exchanges to sell bitcoins in the UK.

Jankelewitz told CoinDesk the previous ruling caused "no small amount of concern" to a number of his clients, which are UK-based bitcoin companies.

HMRC

"The implication of a classification as a single use voucher is that anyone selling bitcoins would have to charge an additional 20% to cover the VAT. Obviously, this puts bitcoin businesses at a huge disadvantage," he said.

In the meeting, Warne added that he had been considering moving his company offshore because of HMRC's classification of bitcoin.

Jankelewitz said he hopes to hear more from the department in the next few weeks.

"I found HMRC to be pretty open minded and I was left with the impression that they are taking bitcoin seriously," he concluded.

Stay tuned for updates

The Festival for the Decentralized World
Thursday - Sunday, June 9-12, 2022
Austin, Texas
Save a Seat Now

DISCLOSURE

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.

Trending

1
Luna Foundation Guard Left With 313 Bitcoin After UST Crash

The announcement comes after reports that over a billion dollars of Terra’s bitcoin reserves are unaccounted for.

The announcement comes after reports that over a billion dollars of Terra’s bitcoin reserves are unaccounted for.

2
Grayscale Investments to List Its First ETF in Europe

The Grayscale Future of Finance exchange-traded fund will list on the London Stock Exchange, Deutsche Börse and Borsa Italiana.

The Grayscale Future of Finance exchange-traded fund will list on the London Stock Exchange, Deutsche Börse and Borsa Italiana.

3
Indian Central Bank Says Cryptos Could Lead to "Dollarization" of Economy: Report

RBI officials said cryptocurrencies could undermine the central bank's capacity to regulate flow of money.

RBI officials said cryptocurrencies could undermine the central bank's capacity to regulate flow of money.

4
Nigeria’s SEC Affirms All Digital Assets Are Securities in New Rulebook

Rules look to clarify crypto’s role in the economy by providing a regulatory framework.

Rules look to clarify crypto’s role in the economy by providing a regulatory framework.