Wednesday, 22 January 2014
Bitcoins & VAT - mostly confusion
With most vouchers, there's no VAT on issue (unless the voucher can only be used for something for which the VAT treatment is identifiable on issue of the voucher), so that VAT gets accounted for on the eventual purchase for which the vouchers is used.
The wrinkle is that, if you buy a voucher from someone other than the issuer (i.e.: an intermediary), that someone is making a VATable supply (if they make supplies over the VAT threshold, currently £79k in twelve month - again, simplified – or have registered voluntarily). The question, of course, is who's the issuer of a Bitcoin? Arguably, it's the software used to generate the things, and not a VATable person. So, anyone selling a Bitcoin is likely to be an intermediary for these purpose.
Some of the press have also suggested that retailers accepting Bitcoins face a double tax on transactions -- probably because it may be regarded as barter, with VAT on both sides (but, see above for the reclaim available).
All of which confusion basically suggests it's about time HMRC actually had a published coherent policy on virtual currencies that can be used to acquire actual goods and services – I doubt they're worrying too much about in-game purchases using World of Warcraft gold …
HMRC considers changing Bitcoin taxes, here, in The Telegraph
UK Weighs How to Tax Dealings in Bitcoin, here, in the Wall Street Journal