Bitcoin Forum

Hope im in the right place I'm new to the forums and just got My JR Status \0/


So I have UK based Limited company its small but I’m building it up with hard work.

Anyway it results in me having spare power so I'm investing in mining rigs to help me out with cash flow as I’m starting out. <---- That and I love the bitcoin dream and want it to change the world but that’s for another thread. ;D

My accountant just told me to expect a visit from the police and be prepared to prove that I’m not funding terrorism. That’s not cool because our UK terror laws could totally ruin my life (god knows how they got those laws even passed).  :-\

So this is the result of being upfront, honest, transparent and preparing to pay tax's on my bitcoin income?

I'm not allowed to copy his email here unless he gives me permission so will seek that next week and see if I can post it here.

Just wanted some views on this from other UK residents really.




EDIT: for speeling im horribad at it.

Any time the state can't 'follow the money' for taxing purposes, they like to bring up the 'we're just wanting to make sure you're not funding terrorists' line. It's crap, it's unfounded, and it's just another lie the state tells so it can justify (to the masses) having the ability to stick their nose into all of your financial affairs (for the purpose of keeping you safe, of course!)

While I am not a lawyer and certainly not an expert in the UK legal system, I'd say Bitcoin transactions are no more of a problem than cash ones. Document where every Bitcoin goes so you can 'prove' it if you're ever investigated. If anonymous money transfer isn't your goal, then avoiding a visit from the authorities *should* be fairly easy.

Rage

Thanks  rage  ;)

Right so im going to start keeping detailed records of my Bitcion Income.
Not going to let the system scare me off this.

Anyone else about with any legal advice or ways I could protect myself.

You don't have to prove your innocence. They have to prove your guilt, beyond a reasonable doubt.

First, a thought: The Accountant YOU pay who gives YOU advice YOU paid for shouldn't be one to dictate terms to, if you share the advice YOU bought with the world, I don't see why he'd have a problem, if he does, suggest finding an accountant who can:

1 Accept your choices, advise and suggest things to make business easier, rather then telling you you're going to be a terrorism suspect, I mean why are you asking this forum for financial advice, you're paying HIM for that!

I'm done the rant.

I wish that were true, but in our post 9/11 terror hysteria driven world, that's no longer true. Here's a link to an article describing just how upside down things have gotten: Guilty Until Proven Innocent (http://libertywatcher.wordpress.com/2011/06/29/guilty-until-proven-innocent/). It's not about bitcoin or bitcoin related, but it probably could be given the right circumstances.

@ evileric.   

Hmmmm ok first I’m not here for any sort of financial advice.

Second my accountant having finished covering his back then went on to explain the tax implications etc. and to be fair to him did a rather nice job on that side.

I can understand your anger believe me however I think you missed my point which can only mean I failed to communicate sufficiently.

It’s the fact that HRMC and the Police are taking a rather dim view of the use of bitcoins (NOT ILLIGAL) that’s getting to me really.

I have worked my ass off for this Government In both the military and then for a short time in the police force. Now as I look back upon myself all I see is a blind tool of oppression.

Yes I got paid and it was a job but I was born with my eyes closed and I’m ashamed to say It's taken me this long to start to understand what kind of machine I live within.

I know the kind of pressure my government can place upon a person and as I too often heard "everyone’s guilty". 
Is it that everyone is in fact guilty of something and you can't move thought-out your life abiding all these law's. Well that’s what the police over here count on I have seen it with my own eye's.


Best advice so far and again I thank you for it rage I shall record everything.

1984

pinjas ow thanks for that.

Damit why hasn't amazon got with the times so I can buy it in bitcoin.

As far as I'm aware there nobody has been arrested in the UK for dealing in BTC, nobody has been to court for dealing in BTC, no judge has made a ruling on what sort of safeguards you need to put in place before dealing in BTC.

I suggest doing all your BTC -> GBP conversions through britcoin.co.uk, and keep records of who you receive BTC from, just to be safe.

Thanks bitplane will take your advice have been using britcoin anyway and the guy who runs it is doing a cracking job :)   .

Guess I let myself get a bit worked up over it.

Lol now just wait for me to be the first numpty to get taken in for questioning.

Well, we do need guinea pi- er... test cases.

V4Vendettas, it's an uncomfortable situation to be in but I think your accountant would be remiss not to warn you of the possibility, and to remind you that your accounting records therefore need to be squeaky-clean.

Also bear in mind that UK accountants are legally obliged to report their clients to the authorities if they have the slightest whiff of suspicion that something is not above board.

So keep your own records squeaky-clean, and make sure your accountant knows that they are.

(Please ask your accountant for permission to post the text of the letter.)

heh, "numpty".  I likes it

You can't prove something you're not doing. Otherwise everyone in the world is guilty of the above... "You take out cash in an ATM, prove you didn't give that money to terrorists"

Thanks for the reply ribuck and having also chatted with a few friends of mine (showed them the email) we in the end all came to the same conclusion that my accountant had actually done the right thing and actually worked out a good solution.

I didn’t know he was obligated to report me to the authorities:-\    thanks for the info.

Will request permission to share the email today and I really hope he gives the go ahead. I believe in respecting trust so if he says its not ok no amount of nudging will tempt me to post it.  :) .

Right well thanks heaps for the support and let’s hope I don’t end up a test case.


On to the next hurdle for him when I sell my first solar system in bitcoins
 lmao.
Poor guy.

Just got off the phone with him and he gave the go ahead providing I kept his name out of it.
-----------------------------------------------------------------------------------------------------
Thank you for your phone call earlier today.

I did some research about Bitcoins and the way it works. Here are some very important points you should consider:

Legal point of view:
I believe Bitcoins is legal mainly in several states in the USA (not all of them). It is not officially legal in the UK. I would even add and say that it is frown upon in the UK by both HMRC and the police.

The main reason for it being frown upon is because (as you mentioned earlier) any individual can hide behind a reference number with no name, address etc… the British authorities are very concerned about this relatively new online system and here you are digging into complex rules under the crime act, money laundering and terrorism funding.

You might get a knock on your door in future from the police or other body asking you to prove that you are not funding any terrorism or crime activity. This is how serious it is.

Although there is a big potential within this concept, looking at the above points, it is my job to warn you of the complications with the law you might have.
I strongly believe that it is only a matter of time until the UK government will come up with a law against it but as you probably know these things take time.

Terribly sorry if this is not the answer you were hoping for.

Tax point of view:     
As Bitcoins are not officially illegal and I can’t stop you from trading, this is how we should treat the income:

•   This is a matter of capital gains rather than normal profit and loss as you are selling items of value (investment through coins).
•   There is an annual exemption of £10,100 for an individual – this will be deducted from your profit before calculating your tax due.
•   Capital tax is calculated at 18% from the net gain (sale proceeds less costs of sales).
•   I believe that under costs of sales we will also be able to claim the electricity your computers use
•   As long as you did not sell the coins into actual cash there will be no tax implications needed.
•   You should keep records of your income as well as the costs you have incurred during the procedure of mining the coins you sold.

I think this covers pretty much everything.

Please let me know if there is anything else I can help you with.

Kind Regards,

Anyway he's working with me on it and has advised me how to invoice in bitcoins if I do end up selling  Solar PV systems with regard to the 5% VAT etc. . Could I end up with the first in bitcoin Legal VAT invoice in the UK :o lolz would be kinda cool man I'm a nerd lol

Hmmm should a Mod now move this to economic or is everyone happy it being here?  Kind of a in between one I think.


Will stop spamming now and again thanks all.

Thanks V4Vendettas,

Your accountant effectively said "It's not officially legal and it's not officially illegal, so be very careful", which is pretty much what I would expect.

It's so sad that the concept of "officially legal" even exists, but that's the reality of the 21st century. It's the reason why PayPal and Google didn't move into the UK until regulations were modified to fit their business model. Unfortunately that avenue is only open to the "big operator" who can meet with government ministers and promise to "create jobs" if the regulatory environment is made friendly to their business.

The good news for Bitcoin speculators is that any gains are treated as capital gains (taxed at 18%) and have an annual exemption. That's less of a burden than paying income tax on the gains. Of course, you will pay company tax on your trading profits, but that's to be expected.

Sorry I'm a bit of a beginner when it comes to these matters, but I don't understand this... What qualifies Bitcoin mining as capital gains? I've been looking on the Inland Revenue site, but I can't really find any examples that I can draw a comparison to Bitcoin with.

Thanks in advance!

If you mine and then barter I don't see how this would necessarily be taxable.

I was thinking that the reference to capital gains tax related to investment profits (e.g. someone who bought some bitcoins three months ago, then sold them now at a higher price).

^^ This but also mining bitocins that are then sold for £.

So I won't be going over my capital gains threshold ;D

Will just sit on/spend the rest.

This is what I don't understand, if you buy equipment (computer) soley create something (BTC) with the intention of selling that product for currency (£), then how is this not standard taxable income?