Potential mass exodus from Spreadbetters.

FXX

Experienced member
1,140 195
Hi Lee

I am somewhat confused as you have personal experience of not paying tax while the HMRC text on this matter includes:

The principles of Down v Compston [1937] 21TC60 and Burdge v Pyne [1968] 45TC320 (see*BIM22019) apply equally to spread betting. To be taxable, the spread betting wins must come not merely from an opportunity presented by a trade, they must arise from the carrying on of that trade.

This statement implies that it is taxable. Being a curious guy i spent the last 20 minutes browsing the web for anything that either supports or is a counter argument. here is what i found (there is a good amount of articles that seem to counter your argument:

http://www.tradingspreadbetting.com/trade/trading-and-taxes

"HMRC will try to tax betting if it forms part of another trade. To be taxable, the spread-betting wins must come not merely from an opportunity presented by a trade, they must arise from the carrying on of that trade. This could happen if, for example, you were a professional stockbroker or share trader, in which case your spread-betting profits would probably be taxable.

Effectively, if spread betting is your main source of income, then this is considered trading and you will be taxed on these profits. Most spread betters should be fine, but it’s worth keeping this in mind if you’re considering moving into spread betting full time.
"


https://www.taxation.co.uk/articles/2010/12/15/21465/better-bet

An accountant states:

"Effectively, if spread betting is your main source of income, then this is considered trading and you will be taxed on these profits. Most spread betters should be fine, but it’s worth keeping this in mind if you’re considering moving into spread betting full time.

My interpretation of this is that if you do something else for a living, which makes you realise a bit of cash could be made from a certain spread bet, it’s not a trade. But if what you are doing day in day out is spread betting, then it is a trade…"



http://www.accountantsfortraders.co.uk/articles/aug-2011/trading-or-spread-betting/

"There is not a definitive argument between the two treatments and whilst true spread betting is outside the scope of tax, if you are a market maker or have your trades organised in such a way as to not be a mere ‘punter’, it is likely that your trading activities will be seen as taxable."

http://www.spreadbettingportal.com/spread-trading/spreadbetting-taxes/

"if HMRC considers that your full time occupation is trading, then regardless of what the spread betting companies say, you may be liable to receive a tax assessment. It will then be up to the individual to prove to HMRC that he/she does not have a tax liability."


Could it be that you might have been sailing under the radar and in reality a target for investigation. I read Barjon's link he shared and there are individuals on there that seem to have been paying tax and additionally discussed it with their accountants. Admittedly i am always on the cautious side of believing forum posts at face value but it seems to be clear to me based on HMRC and other articles that it definitely isn't a clear case of no taxation. Are you dodging tax :)

in any case the way i see it is this classification at spreadbetters for professional traders to me is exactly the type of thing the HMRC would have a field day over. I know their dirty games as i am a consultant and they have a record of targetting consultants and backdating laws to scr3w them over for tax. I know at least 4 people that have been nailed with one of them owing over 100k. Sure this is unrelated but where i am going with this is the taxman are dirty dogs that will go out of their way to find dodgers.
 

Lee Shepherd

Senior member
2,164 570
Hi FXX,

HMRC are fully aware of my situation and my winnings and have been for decades. I've been posting bank statements and betting statements on here since 2008 and am fully transparent, that includes with HMRC. I only pay the tax I have to. If anyone else wishes to pay more than they do, then feel free.

@ Brumby - Thank you for your private message. However, I will only discuss such matters on the public forum and that will be at my discretion. If you wish, you can share your message (unedited and in full) with the forum. This keeps everything transparent.

Ultimately people will believe what they wish to, however, the proof is in the pudding. Once a spread bettor, gambler or trader starts to lose or make money, they should declare this to HMRC and see if they can get a tax rebate, off set losses or pay tax on their earnings/winnings.

Good day to all, now lets all get winning some money.

Lee
 

new_trader

Legendary member
6,212 1,267
Pay your tax!

But your view of this doesn't match what's on the mhrc site


"However, an organised activity to make profits out of the gambling public will normally amount to trading.
Although over time new forms of games of chance have evolved, these principles remain the same. The taxpayer placing a spread bet is not normally carrying on a trade (see*BIM22020*for exceptions). They are not taxable on the profits, nor do they receive relief for their losses. The bookmaker organising the spread bet is taxable on their profits."

"The principles of Down v Compston [1937] 21TC60 and Burdge v Pyne [1968] 45TC320 (see*BIM22019) apply equally to spread betting. To be taxable, the spread betting wins must come not merely from an opportunity presented by a trade, they must arise from the carrying on of that trade. Whether or not a particular spread bet is taxable will depend on the terms of the contract and the economic substance of what is done".


When I read this to me it translates into spread betting in a professional capacity is taxable.


Here is a case referenced on the hmrc site

n Burdge v Pyne [1968] 45TC320 the proprietor of a registered club which provided gambling facilities, including a card room, won considerable sums of money from three-card brag which he played regularly with members in the card room. He was taxable on his gambling winnings.

Sent from my SM-G950F using Tapatalk
I think some people live in denial. I've always believed that if profits from spread betting is your sole source of income it is taxable.

As you quoted from the HMRC website:

"However, an organised activity to make profits out of the gambling public will normally amount to trading.
Although over time new forms of games of chance have evolved, these principles remain the same. The taxpayer placing a spread bet is not normally carrying on a trade (see*BIM22020*for exceptions). They are not taxable on the profits, nor do they receive relief for their losses. The bookmaker organising the spread bet is taxable on their profits."
It clearly states "The Taxpayer" meaning that spread-betting isn't their full time profession.
 

Lee Shepherd

Senior member
2,164 570
I'll leave this conversation with the following: (as it will go on for years)

When a person starts trading, spread betting or gambling, win or lose, makes or loses, earns or not. Check with HMRC (or taxation in your country of residence) whether or not you are liable to off set taxes, get a tax rebate or pay tax. Simple.

We can all discus this till the cows come home or simply speak with HMRC if you think it affects you. Obviously if you are speaking to them to raise debate but yet are not making or losing any money, then your personal efforts would be best spent on learning how to make money from the markets or win from the bookies. Instead of talking about 'what ifs'.

'What if I make money', will I be taxed? If you are winning money spread betting you will know this answer.

If you believe or are unsure you will be taxed, just tuck a suitable percentage of cash away to pay if they do tax you. If you are taxed, you pay the money you stashed, if they say you are not liable for tax on your winnings then happy days. Everyone's a winner baby.

All the best,

Lee
 

Lee Shepherd

Senior member
2,164 570
@ FXX

I'm loving your journal and your efforts to succeed. You seem to be doing very well and on the right path. I can't private message you as I think you have this turned off but if you need any help at all (on any matters including tax related), let me know.

Lee
 
  • Like
Reactions: FXX

new_trader

Legendary member
6,212 1,267
@Lee: I think you are missing the point. I am not debating about a hypothetical "someone" spread-betting. As it stands right now, I know I don't need to pay tax on my spread-betting profits whereas I think you should be paying tax.
 

barjon

Legendary member
10,253 1,549
I think some people live in denial. I've always believed that if profits from spread betting is your sole source of income it is taxable.

As you quoted from the HMRC website:



It clearly states "The Taxpayer" meaning that spread-betting isn't their full time profession.
NT

If you read BIM22017 in my earlier post you will see it concerns someone whose sole means of livelihood comes from betting. It’s tax free. I doubt that HMRC are in denial about it.
 
  • Like
Reactions: Lee Shepherd

NVP

Legendary member
36,588 1,858
hey gang

Forexmospherian wrote a lot about this as well a few years back ...and i have had experience of dealing with HMRC regarding taxable trading and Gambling profits over the years.

the crux of it is really is that many forms of gambling etc attract some up front taxation anyway......so the taxman has taken already his pound of flesh from normal punters and traders who do it as a hobby or sideline....as long as it stays that way they will stay off your back

if you start making trading / Gambling income that is in excess of your primary job or business ...then they come calling .......and especially if you have pretty low levels of alternative income to the gambling/trading income you are generating on a regular basis

they will define you as in the business of Gambling/Trading and therefore a sole trader and tax you accordingly, NI and the works

so dont p*ss them off .........you will not win i assure you

if you get to that stage just embrace it .....formalise and recognise your trading as a business and get on with it ....as the HMRC have already !

no free lunch in UK

N
 
Last edited:

FXX

Experienced member
1,140 195
@ FXX

I'm loving your journal and your efforts to succeed. You seem to be doing very well and on the right path. I can't private message you as I think you have this turned off but if you need any help at all (on any matters including tax related), let me know.

Lee
Thanks for the vote of confidence Lee, having a professional trader remark as you have gives me confidence that i am on the right path in an ocean of smoke and mirrors.
 
  • Like
Reactions: Lee Shepherd

tomorton

Legendary member
7,262 970
Long ago I discussed paying tax on SB winnings with my then accountant. His advice was, if I could convince HMRC to accept SB as self-employment, I should go ahead and count myself the luckiest punter alive.

The accountants took the same view as HMRC, that no matter what level of income or what sort of time you put into SB, this would never be accepted as income taxable by HMRC because eventually, you would become a loser and would seek to reclaim tax back to cover losses.

Meantime of course, the SB punter who does not pay income tax is not getting off without paying ANY tax. The SB firm pays tax based on their revenue and profits like any other firm, and the more I deposit and win through them, the more tax they pay. The tax they pay comes from their customers, and that includes me.
 
  • Like
Reactions: Lee Shepherd

FXX

Experienced member
1,140 195
It seems to be a case of divergence in what HMRC state as there being a avenue in spreadbetting that is taxable, accountant opinions, and personal experience.

What springs to mind is the governments ability to alter their wording and backdate their new policy at the expense of those that thought they were inline with policy albeit somewhat a grey area based on their own wording.

I think this debate is like Marmite where there will always be opposite opponents.
 

barjon

Legendary member
10,253 1,549
hey gang

Forexmospherian wrote a lot about this as well a few years back ...and i have had experience of dealing with HMRC regarding taxable trading and Gambling profits over the years.

the crux of it is really is that many forms of gambling etc attract some up front taxation anyway......so the taxman has taken already his pound of flesh from normal punters and traders who do it as a hobby or sideline....as long as it stays that way they will stay off your back

if you start making trading / Gambling income that is in excess of your primary job or business ...then they come calling .......and especially if you have pretty low levels of alternative income to the gambling/trading income you are generating on a regular basis

they will define you as in the business of Gambling/Trading and therefore a sole trader and tax you accordingly, NI and the works

so dont p*ss them off .........you will not win i assure you

if you get to that stage just embrace it .....formalise and recognise your trading as a business and get on with it ....as the HMRC have already !

no free lunch in UK

N
Did you not read my post above yours? BIM22017 is the legal precedent put forward by HMRC themselves. See it from the link in my earlier post although you might have to scroll down a post or two.

I repeat, it’s only taxable at the moment if it is deemed to be part of some other taxable business activity. Such as bookmaking, or maybe selling a trading system.

FXMO was either engaged in such activities or his claim to have been taxed was as much a fantasy as most of his other posts.
 
  • Like
Reactions: Lee Shepherd

wallstreetwarrior87

Experienced member
1,686 322
I spoke at length about this about 3 years ago with 2 colleagues whom are in the legal profession.

Simply put - they would happily take any client on and defend them in any case brought against their client if "gambling" was the term used and always had been used in defining their ability to obtain income.

They went on to add:

Find just one case where a high earning individual has been forced to pay taxation on spread betting income. Just one😕

Just one?
 
  • Like
Reactions: Lee Shepherd

barjon

Legendary member
10,253 1,549
It seems to be a case of divergence in what HMRC state as there being a avenue in spreadbetting that is taxable, accountant opinions, and personal experience.

What springs to mind is the governments ability to alter their wording and backdate their new policy at the expense of those that thought they were inline with policy albeit somewhat a grey area based on their own wording.

I think this debate is like Marmite where there will always be opposite opponents.
Bloody hell. Maybe it might help convince you to know that of all the endless discussions on here no-one aside from the Walter Mitty FXMO (since banned) has said that they have been taxed.
 
  • Like
Reactions: Lee Shepherd

Brumby

Established member
593 137
If you read BIM22017 in my earlier post you will see it concerns someone whose sole means of livelihood comes from betting. It’s tax free. I doubt that HMRC are in denial about it.
Forexmospherian wrote a lot about this as well a few years back ...and i have had experience of dealing with HMRC regarding taxable trading and Gambling profits over the years.

the crux of it is really is that many forms of gambling etc attract some up front taxation anyway......so the taxman has taken already his pound of flesh from normal punters and traders who do it as a hobby or sideline....as long as it stays that way they will stay off your back

if you start making trading / Gambling income that is in excess of your primary job or business ...then they come calling .......and especially if you have pretty low levels of alternative income to the gambling/trading income you are generating on a regular basis

they will define you as in the business of Gambling/Trading and therefore a sole trader and tax you accordingly, NI and the works

so dont p*ss them off .........you will not win i assure you

if you get to that stage just embrace it .....formalise and recognise your trading as a business and get on with it ....as the HMRC have already !

no free lunch in UK

N
You should also read BIM22018.
https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim22018

While spread betting may not be taxable, the business activity of spread betting may be. The issue is therefore what constitutes a business activity vs. a hobby. In the Graham v Green [1925] case, the discussions resolve around the notion of organised activities.

There are several Australian case laws that contrast the difference between a hobby and a business activity. Essentially it is a question of fact based on the characteristics of the activities in making a determination :
1)Is it conducted in an organised, systematic and regular manner;
2)The nature of record keeping and reporting of activities;
3)The presence of a systematic approach in risk management;
4)The adoption of research activities and outside services in decision making;
5)The reliance on the use of supporting hardware and software to conduct the activities

Whether it is a business or a hobby will be dependent on how you conduct your bets.