Embattled virtual currency Bitcoin has received a fillip from Britain’s HM Revenue & Customs following the tax authority’s decision to scrap VAT on all trades in the fledgling money.
The UK’s position stands in stark contrast to other regulatory regimes, which have viewed Bitcoin as a shady vehicle for tax evasion and money laundering – a sentiment not helped by the recent collapse of one of the currency’s leading exchanges, Mt Gox, which left depositors $500m out of pocket.
HMRC’s decision means that the 20 per cent tax will not be applied on trades nor the margins earned either, effectively classifying Bitcoin as a proper currency – although other taxes, such as Corporation Tax, would still apply.
Welcoming the move Jonathan Harrison, an entrepreneur who brought Bitcoin ATM’s to the UK, said: “If they had added VAT that would have destroyed us, there would have been no point in starting this business at all. It’s great that the UK authorities are seeing Bitcoin as an innovative technology that can help the economy.”
Bitcoin Foundation has already announced that it will redomicile to the UK from the US this spring in light of what is perceived to be a favourable environment here.