HMRC Issues Bitcoin VAT Exemption

HMRC has abandoned plans to charge VAT on Bitcoin trading.

In new guidance, HMRC also said it would not levy the 20% tax on the creation (mining) of the virtual currency.

Bitcoin has been in the headlines over the past few months as it surged upwards, then downwards, in bubbles of speculation. To add to its "media presence" MtGox, a leading Bitcoin exchange, recently collapsed losing $500M in deposits.

Despite the fact that Bitcoin can be used for all manner of illicit transactions, money laundering and evasion HMRC exempted it because (as per the BBC) transactions "are exempt because they fall within the definition of 'transactions, including negotiation, concerning deposit and current accounts, payments, transfers, debts, cheques and other negotiable instruments'".

However, VAT will apply to suppliers of goods and services sold in exchange for Bitcoin, based on the sterling value of the virtual currency at the point of sale.

Tax does have to be taxing.

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