Britain is set to remove VAT from the controversial, increasingly popular virtual currency, Bitcoins, just a few days after the first Bitcoin ATM was launched in London. The move signals the currency is fast going mainstream when, until recently, it was only used by the rebellious few.
20% VAT removed from Bitcoin
HMRC told traders last week that it would stop applying 20% VAT to Bitcoins. It has also decided to stop charging VAT on margins, according to the Financial Times, although the currency will still be subject to other taxes.
The change of heart mirrors a new classification for Bitcoin and the many alternative virtual currencies that are springing up all over the place to meet increasing consumer demand. Once they were classified as ‘vouchers’ for VAT purposes, now they’re an asset or ‘private money’. The news comes just as Mt Gox, one of the leading trading platforms for Bitcoin, collapsed after losing almost 500 million dollars of customer deposits in a hacker attack. Which goes to show things are still very fluid and unpredictable in virtual currency land.
Technical guidance on the way from HMRC
Apparently HMRC will be releasing technical guidance soon. If it doesn’t affect you yet, things might change pretty fast. Some experts believe the currency and its alternatives are set to revolutionise the world’s financial systems to such a dramatic extent that banks and other intermediaries might cease to exist altogether. Stranger things have happened!