Springfords LLP blog

Some news, views and comments about everything and anything, relevant and irreverent.

Get Bits or die Tryin'

21 February 2018

50 Cent or 50 Bit; the notoriously absent-minded rapper, who forgot about his earnings from a chart topping album. He’d accepted payment in bitcoin, as opposed to actual coin. Forgetting about your taxable earnings is virtually no excuse.

Baffled by bitcoin? Unenthused by etherium? Generally confused by cryptocurrencies? Whether the thought of mining for a virtual fortune fills you with all the fervour of a Klondiker; or leaves you unimpressed to the point of tedium, the rules of return on investment remain the same. Make sure you’re in a stable environment. If the roof caves in, you best make sure you’re not under it.

In the unregulated, free-for-all that is the phenomenon of blockchain-backed cryptocurrency dealing, fortunes are being made - and lost - faster than you can hit the return key.

We’re not here at Springfords to tell you if that’s a good thing or a bad thing. We’re not about to say whether you should dive in without your water wings; or kept your feet firmly on dry land. Our advice is all about what you do when you crystallise your returns, be they good or bad, and how to avoid any unpleasantries when you repatriate your earnings to the real world, where real world taxes fall due.

This was a concept that eluded the wordy 50 Cent (Curtis to his friends) who now faces a prodigious back catalogue of back taxes. A situation regular readers will know Mr Cent has familiarised himself with before.

He’s not the first to bring the house down by letting his accounts get out of hand. Take heed of what happened to Erddig.

No, Erddig is not the latest cryptocurrency to hit the headlines - it’s a posher than posh house near Wrexham, famous for it’s gardens, its furniture, and its quirky dip in the middle.

The owner, a fabulously wealthy nineteenth-century coal mining magnate, was so eager to extract the wealth from beneath his feet, that he dug under his house and, consequently, made carpet bowls in the corridors a bit of a lottery.

The same could happen to cryptopreneurs (that’s an actual word, actually) who vigorously mine away, under their feet, for the modern digital equivalent of black gold (and we’re not surprised that there already is a cryptocurrency called black gold).

That though is not the worst thing that could happen. Never mind getting in a fankle about tax on your earnings, what about getting old school ripped off, just like the good old days. In the first few weeks of this year, masked robbers blagged the house of a cryptocurrency trader in rural England, and forced him to transfer all his bitcoins to them, complete with sawn-offs and ski-masks. No old style swag bags required, but plenty of old style robbery with violence.

Whether or not you have faith in the investment value of the currencies you just can’t hold, those early adopters in everything - the criminals - clearly thought it was worth their while.

So, if you choose a life on the straight and narrow, and have a memory at least the equal of 50 Cent, the rules of investment apply to you too. Be careful which armed masked bandits you let into your home, and don’t forget the tax implications of any gains!

About the Springfords blog

springfords blog

Some news, views and comments about everything and anything, relevant and irreverent.

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