Spread Betting Tax Free Profits or Not

[barjon]

..........and again

 

[postman]

..........and again

Apparently you can lead a Spread Bettor to facts, but you cant make him read them.

 

[Sonicscooter]

Hi Neil I'll get my apology in first if I may. I suffer from a mild form of autism spectrum disorder known as Asperger Syndrome, this means I lack cognitive empathy and so some people say this comes across as rudeness.:whistling

Your statement about someone somewhere saying something which may or may not have anything to do with the subject we are discussing is as much use as a chocolate teapot. Did you check out what this mystical chap said or are you just regurgitating someone elses drivel? I once read on t'internet Freddie Star ate someones hampster, there is a B52 bomber on the moon and Kim Kardashian really meant it when she said "I do". Its possible that none of those things are true!


Did anyone read any of the previous posts from people who actually bothered to put some effort into this discussion such as Liquid validity?
http://www.trade2win.com/boards/spr...ing-full-time-sole-source-income-traders.html
"I am a full time spread-bet trader. I have been making good money doing this for nearly four years.
I trade a £40K account split between two SB firms. I pay no tax and have a letter from the IR stating that I do not have to pay tax on my winnings even though it is my sole source of income. (I have it framed on my office wall)"

No offense. :innocent:

I wonder if me n DJ have it.........evening Postie......

 

[timsk]

..........and again

"Though the terminology used in spread betting frequently echoes that of the derivatives market, no assets are acquired or disposed of and no chargeable gains or allowable losses arise from spread betting"
As Jon points out, it's in black and white and as clear as clear can be on the official HMRC website. Anyone who claims to have paid tax on profits made from spread betting can claim a refund!
Tim.

 

[BadRobot]

Some other knob head quotes the term "professional gambler" and even remembered a small detail about horse racing and then completely gets the wrong end of the stick!
"The revenue already have a tax status for full timers referring them as 'professional gamblers'. The case was proven a long-time ago with someone who made his income off the horses."
Yes the case was proven 'a long time ago' and it was ruled HE DIDN'T HAVE TO PAY TAX !

Please see my previous post for explanations on rudeness etc... time for some more of my medication.

I was going to mention this. Only reason i didnt was i couldnt find the link to prove it although i am 100% sure it was a link i followed from a related discussion on this website. Wasnt the HMRC argument that he had a system that gave him a mathematical expectancy of profit, therefore he wasnt actually 'gambling' or something like that? But yes, the court ruled against HMRC in this case.

 

[2be]

'Quite good insight' - Really? Did you read it?

FIRST question and answer ....
Q: So is Spread Betting really tax-free?
A: The simple answer is yes. .... If you do not have any other regular taxable income other than gambling you will probably be classified as a professional gambler (your trade) and may loose your BIM22017 exemption...."

The knob head that wrote that (didnt even bother to attach his name to it) obviously didnt bother to go and read the rule he quoted.
http://www.hmrc.gov.uk/manuals/bimmanual/bim22017.htm
"...This shows that having expertise or being systematic (‘studying form’) is not enough to create a trade of being a ‘professional gambler’.
Some ‘professional gamblers’ do carry on a trade, for example, where they receive appearance money for appearing on television programmes. They are providing a service to a customer (the television production company) for reward. Whether their gambling winnings are proceeds of that trade would depend upon the facts."

If he'd read the ruling he'd quoted he would have seen that being a spread bettor does not qualify you as a "Professional gambler".

Some other knob head quotes the term "professional gambler" and even remembered a small detail about horse racing and then completely gets the wrong end of the stick!
"The revenue already have a tax status for full timers referring them as 'professional gamblers'. The case was proven a long-time ago with someone who made his income off the horses."
Yes the case was proven 'a long time ago' and it was ruled HE DIDN'T HAVE TO PAY TAX !

Please see my previous post for explanations on rudeness etc... time for some more of my medication.

I have been told by an accountant, who was also trading that it is very useful to have another stream of income apart from spreadbetting.
The argument has already been well explained. As a precaution it is better to avoid the status of financially depending only on "gambling" which spread betting is classify as, just in case.
Apart from this, the case is clear, spread betting so far is tax free IMHO.

 

[postman]

Although the subject has been done to death over the years, we might as well do the exercise again to see if any new information comes to light.

http://www.hmrc.gov.uk/manuals/cgmanual/cg56105.htm

I assume as the starter of this thread your the type who walks up to a crowd of people in a pub on a Sunday afternoon and says something akin to "Those immigrants eh" and then walks off to a safe distance to watch the ensuing melee.

If the 299 word ruling ON THE HMRC website was not clear enough for some people
http://www.hmrc.gov.uk/manuals/bimmanual/bim22017.htm

Then here is a good breakdown of the case http://www.taxation.co.uk/taxation/articles/2002/07/18/1949/still-luck
Anyone confused about whether you need another form of income to 'cover your tracks' should read it.
"The facts of that case were that for a number of years a gambler derived substantially the entirety of his income from gambling on horses. The Revenue sought to charge those winnings to tax. "
The case specifically addresses this point!

And their summary for those who cant be bothered to read it.
Despite the absence of a satisfactory explanation for the non-taxability of gambling winnings, the rule that they escape tax is indubitably one which is entrenched in the United Kingdom tax system. In my opinion, it could not be overturned without legislation and/or judicial dicata at an appellate level.

This guy actually put his name to the article and is a Barrister.

 

[postman]

Just as an aside, I suggest people focus their efforts in making a profit first rather than wondering what might possibly happen one day in the future if they're very very lucky and actually do! I 'bet' the majority of spread bettors will not be blessed with the opportunity to pay money to the taxman even if they had to.

 

[counter_violent]

I assume as the starter of this thread your the type who walks up to a crowd of people in a pub on a Sunday afternoon and says something akin to "Those immigrants eh" and then walks off to a safe distance to watch the ensuing melee.

Uncanny insight

I could start an argument in an empty room.

 

[Forexmospherian]

I am sorry to say it -

IT IS NOT BLACK AND WHITE

I will say majority of spread betters who pay any tax through other income or other investments etc etc - WIll not have to pay tax on spreadbetting.

However for the unfortunate few who a re full time and making their monies from spread betting - and paying no other Tax - then according to where you live and under what Office you fall under - you could still be taxed on your gain

Forget that 1925 test case - forget anything over 10 yrs ago - the IR have to power to basically find a way to tax you if they find the need

Believe me - I have discussed this with Tax experts from 3 accountancy firms ( 2 top 5 ) - and even they had different views - ie like a group of economists- ie they never agree - you can have 5 in a room and you would have 5 different views

They did agree that maybe 90% of spreadbetters would never need worry or have to pay tax - mainly because it would not be their sole income and because for a start they don't even have to list it etc

But the "ballgame" totally changes if its your full time job and you are making a consistent income and you pay NO other form of tax

In my case I had to pay - after negotiations - as other investment income was involved and i was already on their hit list and my case was complex.

In 90% of cases most spreadbetters would never be under investigation and so the IR would have no need to question them and if they are already pay tax on any other income and spreadbetting is not their main form of earnings - no problem

I am sure there will be a new "test case" in this next 5 years - but no way do the IR want it and at the moment they have the power - and the money to make sure they will win.

Please - don't let me worry any spreadbetter trader - just make sure you are already clean with the Tax man before you start earning large amounts of money per year totally tax free


Regards


F

PS - If you want to be safe - ask for a letter from your broker confirming spread betting is tax free - ask for advice from your accountant - and up to you - even contact your local area tax office.

If you get all that - that's good enough to cover you if you then get caught on any other tax problem - ie mine all started over 22 yrs ago when I did not declare my second company car phone and said I was doing over 18k business mileage per annum - ( to and fro to home did not count ) and my - it opened a can of worms from then on ;-(

 

[postman]

I am sorry to say it -

IT IS NOT BLACK AND WHITE

I will say majority of spread betters who pay any tax through other income or other investments etc etc - ...

In my case I had to pay ...

I am sure there will be a new "test case" in this next 5 years - but no way do the IR want it and at the moment they have the power - and the money to make sure they will win.

Forgive me - I've had a good day today and I cant let that lay. (I clumsily avoided the word 'lie' in case it was misinterpreted).

You did NOT have to pay, there is no law that says you have to pay. You CHOSE to pay, and in my opinion you chose badly. But I grant you I have no insight into your tax affairs.

It doesnt matter how old the Law is (we still use stuff from magna carta), until a case is brought before a court where it is ruled someone does have to pay, then you dont HAVE to pay.
I am not a lawyer, and have no legal training, but HMRC like to 'negotiate' with people because they dont want to go to court in case they lose and open the floodgates to copycat ventures.

Just my Victor Meldrew opinion. :innocent:

 

[postman]

Out of curiosity F, do you offset your 'betting losses' against tax? Or dont you make losses?

I cant believe I havent sworn once - yet.

 

[barjon]

Forgive me - I've had a good day today and I cant let that lay. (I clumsily avoided the word 'lie' in case it was misinterpreted).

You did NOT have to pay, there is no law that says you have to pay. You CHOSE to pay, and in my opinion you chose badly. But I grant you I have no insight into your tax affairs.

It doesnt matter how old the Law is (we still use stuff from magna carta), until a case is brought before a court where it is ruled someone does have to pay, then you dont HAVE to pay.
I am not a lawyer, and have no legal training, but HMRC like to 'negotiate' with people because they dont want to go to court in case they lose and open the floodgates to copycat ventures.

Just my Victor Meldrew opinion. :innocent:

I suppose it is possible if the spreadbetting was considered part of a related wider business activity. On its own there's no problem, particularly since the SB companies are taxed as bookmakers where the Revenue can be sure of getting their money.

Wouldn't have thought fxmo's style of trading was suited to spreadbetting, but he is one of the best traders in the land, of course

 

[postman]

Dear FoMoFo,
I hope you dont mind me being so informal but I feel we know each other now and are 'friends'. Not Ross and Rachel friends you understand, more Chandler and Joey, (I am obviously Joey, "How you doin", see ).

I feel as a friend I can offer you a proposition that would save you paying huge amounts of tax, one might even call it a 'proposition bet', and you know you can trust those.

Next time Mr HMRC (or Mrs, I have heard they are quite liberal nowadays following Ms Pankhursts little episode) comes knocking on your door, say "Nay, Nay and thrice Nay I shall not pay your unfair tax, let a Judge decide the merits of your cause".
At which point, and here is the cunning plan worthy of a Fox who is professor of cunning at Oxford University, I offer you a Binary spread bet!

Let us say for argument your net worth is a mere £10,000,000 I know, laughably low but it helps the plebs reading this follow the calculations :innocent:.

I offer you a binary bet to the value of Buy 99.999,990 / Sell 99.999,999 my spread is so incredibly low I dont know how I survive. This binary bet is that you win the ensuing court case! You Buy for £9,999,999 and if you win I pay you back £10,000,000. :clap: However if you lose , you pay me £9,999,999. Now here's the cunning part of the plan, if you lose, you claim the loss as a tax writeoff and pay no tax! :clap: And if you win you collect £10,000,000 :clap:. Its a win - win.

Of course if you lose I will let you have access to the money, this is because we are such close friends now. no sorry Chandler and Joey style.

I am registered in South Africa for tax purposes and you can come and see your money any time you like, you can touch it, feel it, take it out to dinner ... But as South Africa can be such a dangerous place I will look after it for you.

I'm looking forward to meeting your money, sorry YOU in the near future, "Call me"

Postman.

 

[Forexmospherian]

Hi Guys

Just had a break from watching the France v Nigeria match

i will explain more in detail later on - and also answer questions raised by DJ etc

How I look upon it is similar to that great misleading marketing phrase used in the mobile phone industry

FREE UNLIMITED TEXTS - under your 2 yr contract etc

Well for maybe 90% of all contract users - it is - but then the fanatical "texters" who take advantage of these contracts suddenly find out they are limited to 3000 total texts in a month - with the rest as a charge.

I have not got a clue if any court case came about from it - but in the small print nowadays mobile phone contractors cover themselves.

Well that is exactly the same in tax law

According to an tax accountant with KPMG in Bham - individual cases are not always covered by the general rule - after all the IR are hardly going to lead themselves wide open for people taking advantage of a so called "grey area"

I was informed if spreadbetting was not my main activity - ie if I worked 10 hrs or 100 hrs a week it did not take up the majority of my work time - and I was paying tax on another source of income - via a employed job - then spreadbetting was tax free.

However - if you are not paying any tax from other income earned from other works - and spreadbetting is you main form of revenue and you participate daily etc and you are generating a minimum of over £10k now maybe £12k per annum from it - it will be classified differently and you will be taxed on - just like any other form of income.

This I believe as been challenged - but so far not one case as come to court - ( yet) and most people involved will neither have the monies or inclinations to take the tax office on

I also understand this happens in so many other areas of Tax law - ( my case is entirely different )

Since 2010 any income I earn from currency trading ( note trading) whether via spread betting broker or via a proper Forex broker I declare and pay tax on.

Therefore there is no advantage for me to stay with a UK spreadbetting company now.

More to follow later on

Regards


F

 

[BadRobot]

Assuming Fxmo is telling the truth regarding forex, CFD and spreadbetting then i guess HMRC would have felt pretty confident in claiming tax. I think (and i am not a legal expert at all) that logically if he claims that his CFD/Forex trading is his business then HMRC would be fair in saying the spreadbetting was a continuation of his trade and therefore taxable.

As someone who is self employed i am more than aware that what HMRC say they can do and what they can actually do are a very long way apart. They rely on bullying and threats and the idea that the victim will feel they couldn't possibly afford or win a court case. I actually pay insurance that covers me for legal and accountancy costs in case of me getting into a dispute with HMRC.

 

[BadRobot]

That wasn't the point I was driving at... rather, based on Fxmo's info, the tax status he describes would not make sense.

I did read your post and i do get the point. Fxmo is clearly not being 100% open about everything and makes some quite contradictory statements.

That being said though, its very hard not to be cynical in this business (or hobby, whatever you like to call it) as few people seem to be very honest. That is why i try to give people the benefit of any doubt whilst keeping a healthy skepticism.

Fxmo may be telling a pile of porkies, i really couldnt say nor would i want to accuse him of doing so. But, he has mentioned FX, CFDs and spreadbetting. I am simply pointing out that as far as i understand things (note that last bit as i am not an expert) if you are taxed as a trader then HMRC are likely to view spreadbetting as continuation of the trade.

 

[Forexmospherian]

Forgive me - I've had a good day today and I cant let that lay. (I clumsily avoided the word 'lie' in case it was misinterpreted).

You did NOT have to pay, there is no law that says you have to pay. You CHOSE to pay, and in my opinion you chose badly. But I grant you I have no insight into your tax affairs.

It doesnt matter how old the Law is (we still use stuff from magna carta), until a case is brought before a court where it is ruled someone does have to pay, then you dont HAVE to pay.
I am not a lawyer, and have no legal training, but HMRC like to 'negotiate' with people because they dont want to go to court in case they lose and open the floodgates to copycat ventures.

Just my Victor Meldrew opinion. :innocent:

Hi Postman

Although you have the "gist" of what you can and cant do - you have obviously not have not been party to a full tax investigation - otherwise you would not be quoting the "theory"

First of all the HMRC have more power than the Police.

If you are arrested by the Police - you are innocent until you have been proved guilty

If you are investigated by the IR ( HMRC ) and they find fault - and you are served notice - you are guilty - until you prove yourself innocent.

Its a different ballgame and they have you by the "footballs" and they know how to squeeze them far tighter than any heavyweight thug.

If you don't agree to pay or negotiate- but instead want to appeal - thats fine - but first you have to pay your dues - or suffer a CCJ or if you still protest - possible bankruptcy..

Then if you take it all the way - you need anything from £10K to £50k+ depending on your lawyers and accountants acting on your behalf.

So you might not be taxed say £25k on your spreadbetting account over last 3 years - no they will let you off that one - but instead just fine you with interest for other minor infringements etc etc ( they will find them ) for just £16k.

OK - you refuse to pay as you are appealing in the courts - against the advice of your accountants and lawyers etc etc - and you are determined not to negotiate a settlement.

You want it bought up in court within a month or two - the Tax office lawyers think its needs 6 months to a year to get all their evidence together ;-)

Do you see were I am coming from.

I thought I was streetwise with years of business experience behind me - but you become the loser - the only people who will gain is your accountants - lawyers and of course in the end - the tax man

For maybe 90% of all spread betters - there is no problem - you will not have to pay tax - especially if you dont make a meal of it and inform them of everything they really want to hear.

But for the full time "gamblers" who have an edge and its their main income and they pay no other tax - then I can tell you now - the chances of you getting away making say $50 -$200k per annum infinitum and paying no money over to the tax man is about the same as me winning the next Euro Lottery

Regards

F

 

[Forexmospherian]

F,
I'm confused. You stated in your other thread* that you've been forex trading for the last 11 years (6 years full time) using a forex/cfd broker (which offers the tight spreads you need for scalping). As I'm sure you know, forex trading is taxable under UK law.

Yet in this thread you state that during this time you were found liable for tax by HMRC for spread betting, under the definition "professional gambler". Furthermore that spread bet winnings were your sole income? This doesn't make sense if you were in fact trading forex/cfds which is taxable.

Can you clarify?

* http://www.trade2win.com/boards/dis...trading-calls-expert-retail-forex-trader.html

Hi DJ

Sorry to confuse you

Yes agree forex trading is taxable under UK law - and I have paid and will continue to pay my taxes due on my forex trading account (s)

However - originally when I got involved - and even when I started full time I had several spreadbetting accounts that I did not declare on my tax returns etc - on the advice of an accountant I no longer use.

My case was complex and also I was on the IR "radar list" from prior years and therefore received regular investigations - as I was involved win 3 non forex related businesses - since been sold and had investments overseas.

i think you might be able to work out what I tried to do - and i was wrong and so suffered the consequences and was not allowed to have tax free status on my - or family related spreadbetting accounts.

I prefer not to go into detail with regards to my personal affairs and certainly don't want to say what I did or give traders "wrong ideas"

I just dont want all fX traders thinking its easy - ie I never need pay tax again and can be a full time spreadbetter and even if I make $300k per annum - it will still be tax free,

But as I have said and will repeat - for 90% or maybe more of all spread betters - their winnings will be tax free

Regards

F

PS

Another update on whats happening on spreadbetting -

http://www.telegraph.co.uk/finance/...tax-exemption-after-Lords-raise-concerns.html

 

[counter_violent]

Anyone familiar with "the first law of holes"?