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HMRC seeks alternatives to Bitcoin VAT

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HMRC has advised traders that it is looking at alternatives to 20% VAT on purchases of Bitcoin, which is regarded as a voucher rather than a currency, the Financial Times reported. Traders have ‘complained that the VAT made their businesses globally uncompetitive and was forcing them to look at moving to more favourable jurisdictions’.

HMRC said it was listening to the industry, the FT said, but had not reached a decision on the final tax treatment. UK policy makers had ‘ruled out classing Bitcoin as an official currency’.

Bill Dodwell, head of tax policy at Deloitte, said many large businesses would be put off from accepting virtual currencies such as Bitcoin ‘given the fringe nature of the industry and lack of transparency’. But he added: ‘That’s not to say that a cryptocurrency will not succeed in the future. HMRC clarifying its tax treatment will give more certainty to participants in the market and over the transactions taking place. This may boost confidence in cryptocurrencies and lead to wider adoption.’