Treatment of profits arising from dealing in the trading of cryptocurrencies.
We have all heard of bitcoin and its miraculous rise in value from US$900 to US$19 000 during 2017 (it is now worth about US$14 000). I was surprised to learn that there are more than 30 of these currencies now.
We have a client who is a small builder and has made large profits trading in a dozen different cryptocurrencies amounting to several hundred thousand pounds. The ‘social trading’ platform he uses describes the investment as a contract for differences (CFD). We can find no documentation of this.
Given the way cryptocurrencies operate I am sceptical that the counter-party to the contract is a holder of any of them. HMRC’s guidance still seems to be a work in progress. It says: ‘Cryptocurrencies are an evolving area and work on determining their legal and regulatory status is ongoing’ (see the Capital Gains Manual at CG12100). Without ownership of the underlying...
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