If the UK government taxed sb clients' gains, it would bring in negative tax revenues (credits and allowances for losses would be bigger than revenue gained from the winners) which isn't the point of taxation at all.
Hi metrader
One of the questions I remember raising with KPMG Tax guys via my accountants and the answer was easy.
It would not need to tax the SB Clients gains - and then allow the losses to be used against tax paid on winners or other income.
Instead - the HMRC have other powers so that they can basically have their "cake and eat it" in special cases. Remember it only going to be a very small percentage of traders who fit the criteria we are on about - ie 1- Overall winners with profits in the financial year -( that's maybe less than 15-20% of all spreadbetters) 2 - Full time with no other income of which the spreadbetter is paying tax on ( again a very small percentage of the 15-20% ) I would say again less then 20% of the winners ) 3. Producing enough profits to make it worth while taxing ie if the spreadbetter only made say £9k profits in the year with no other income etc - he would not be taxed anyway .
Now if you want to know the game the HMRC then play - they identify the players first who might fit in this special category - ie from all spreadbetting companies - ie players with large capital account and with single wins over say £5k or what ever size they chose.
They then request a meeting
With me - unfortunately i was already on the old IR "naughty list" from business activities in 1985/6 . My first penalties for failing to declare all income etc was less than £4k - but then you are followed for the rest of your working life and generally investigated every 5 to 7 years. I had 3 investigations and the last one in 2010 - I was by then trading and fitted the "special criteria".
I was warned not to continue with both type of trading - ie paying tax on some broker accounts - but not on spreadbetting brokers and also admitting I was full time and planned to take advantage of the "tax free " situation. So I faced a so called additional "penalty" ( note the word - not purely a tax request on additional income) and when I wanted to challenge it - I would have been faced with fairly large costs as well as it being maybe stalled for another 6 -12 months whilst they wanted to investigate me in further detail
Remember in UK Law - you are innocent until proven guilty.
With the HMRC - its different - you are guilty and can be penalised and requested to pay ( or face additional fines or jail ) until you prove yourself innocent .
While all this is taking place - you also have to pay your accountant fees and of course additional costs for additional experts advice .
The odds are stacked heavily against you I can assure you - remember when you are interviewed - you have to swear on oath etc - heavy stuff - If you think trading is pressurised - I can assure you - its nothing compared to what I went through .
I negotiated myself a deal in the end - but was still not happy with the situation.
Yes you can do that - as already mentioned things are not just "black or white".
Talking of negotiation tactics - mine pale into insignificance compared to the stories I heard via some of my accountancy contacts . ie a short fall of VAT payments on a car sale business of over £1 million pounds of 8 years - settled for a one of quarter of a million payment to the HMRC.
If you think I am talking a load of tosh ( rubbish ) then i would immediately ask you the question - have you ever worked in the business world in a larger organisation at a Director Level ?
If you have - you totally understand what am saying - if not maybe then then its all new to you.
Regards
F
