What’s up today? (Part 1)

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6065

Capital gains are only for the gains. Buy at 100 and sell at 105 and the tax is a percentage on the 5 only. So it should never be more than exists.

I don’t agree that tokens have no capital. The whole concept of a token is that it represents something else, as a placeholder. MAID is a placeholder for digital resources (space, cpu, etc), for example. Eth is for distributed compute or sorts.

Even at the most generic, cash is a substitute for energy, labour, etc. Fiat is just a token too. The difference is, fiat is the state’s chosen token. It is what they control, what they collect tax in, what courts settle debts in. These special attributes are what gives fiat tokens value. It’s what keeps the state in the middle of everything.

Do we really expect the state to give up fiat’s privileged position? Do we really expect them to step aside and wave through an alternative that cuts them out?

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6066

This is true and wile I agree, there are a couple of issues. HMRC position in 2014 was dubious at best and they cleared it up in 2018. So the rules were clear and that’s that. However the “value” is very subjective. So i.e. right now if you sold 5million MAID the price would collapse, however HMRC take the price on coinmarket cap or similar as the achievable price and it’s not. I got caught that way.

What I see so far has been lack of clarity where all errors are considered only in favour of HMRC. Then some clarity, but not a lot, over the class of crypto, asset/property/currency etc. it seems to be treated in a way that is not uniform.

Now I assume the worst in all cases. HMRC have the ability to apply 100% tax if they are not happy and that is scary as there is no defense a normal person can apply there.

I am 100% happy to follow the rules if they are clear and applied fairly.

then question the rules is also OK, be told of how/where to apply “value”. For instance you cannot trade maid for £ but HMRC makes the assumption maid has a £ value regardless of liquidity, you cannot change them from that.

So it’s a bit of a mess right now and whether right or wrong it is confused as to the class crypto falls into, then how that works for companies (no decision yet) or non security tokens (again unclear) . So a mine field and the only folk that need to walk it are whoever is *not HMRC :wink:

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6067

You’re getting confused.

Does not imply that everything else has the same privileged position.

Obviously so… but first there has to be capital.

Cryptocurrency is not cash; cryptoassets are not assets until realised. The difference is that privilege you talked to.

Most of this confusion is that people jumped in without understand what crypto is.

Again the example I gave above.

Create yourself a list of UUID/numbers or whatever and call them “tokens”.

A1
A2
...
A1000000001

Now sell me one for £1 … write the transaction at the bottom and sign it (cryptographically if you want to call it crypto). Then compress that file (as a .zip or other) and cryptographically sign that as a thing you call a “block”… a genesis or if it’s just a list of transactions, then link it back to the previous block. That is everything you need to know about “blockchain”. The sum of transactions is the “balance”.

Now - I dare you to do that, and you will not… because you would become a billionaire and liable for the CGT!

This is not rocket science and saying shit does not make it true… regardless of whether it’s a politician; HMRC; or any other.

6068

I think this is incorrect and that fiat money, by definition, is not a token for anything.

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6069

Bad wording by me there. A bank of England note used to be exchangeable for gold. A token for gold. Fiat is more like a stay out of prison token, really.

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6070

Well, fiat is more an avoidance of negative feedback… the lazy approach to finance that has corrupted economics; politics; and wider establishment, where every problem has money thrown at it.

The confusion that causes relative to crypto is notable too… as people do mistake what is real value. Fiat has that privileged position… that’s what keeps the dollar alive. A poor kind of money but still effective because of the law and force that backs up and creates that reality.

Negative feedback is important for aligning with reality…

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6071

I’m not sure what you are getting at here. The value isn’t in the implementation. It is the utility value that people give it. It doesn’t matter if the token is written on the back of a fag packet or a fancy decentralized ledger. If it has a recognisable value, HMRC will want their pound of flesh (excuse the pun!).

6072

“Fiat” literally means something like “Let there be” in Latin. As in “Fiat lux.” means “Let there be light.”

But I think we’re getting off topic here. Maybe a new topic would be better.

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6073

No… the trap they have set is they want more than that.
It’s almost a proof of negative challenge and its stressful for the individual because of the incompetent way it’s been setup.

I did not suggest there was value.

People imagine the value they would like to be able to realize… and the HMRC noobs doing the same… but greed does not suggest real value exists.

The test is in that realizing value… which is only made real and validated at the boundary of crypto (atm … in future, the law backing up crypto, might change that but as above, .gov is behind the curve for there to be any confirmation of value ahead of that point of making real the value.)

Quite so - what matters is the real capital value… and there is none in crypto until it is made real… made real atm is a transfer into real world fiat or object… in future, made real perhaps by law acknowledging it.

The risk and the difference here is evidenced in the volatility of perception of value that is the coinmarketcap presentation… up and down by 30% is illusion.

Also, again

If you sell me a token for £1 from a billion tokens, then the spot value atm is 1token:1£ - and you are a billionaire… or you might choose to imagine you are … or the HMRC might chose to.

offtopic - there was a thread already for tax… likely filed in a dark place where it should be! :zzz:

6074

The reality is, fiat has value because it extinguishes a debt in the eyes of the state. The state has the power to create you debt in the form of tax. You need fiat to pay it off, which puts fiat in demand. They then spend it and the loop continues.

If you cut fiat out of that loop, it loses its value. While the state could use gold, silver, bitcoin, etc, they aren’t needed. Taxation drives demand for fiat, whether people care for it or not. It is cheaper for the state to use fiat and it has a stronger hold on an economy dependent on it.

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6075

Define ‘real’. Define ‘capital’. I think you may be getting bogged down in the physical world. The concepts are more abstract than that, imo.

6076

I refer you to your previous answer!..

Either by way of being a real object of inherent value or something that is legally bound.
If the gov got its act together and saw law acknowledge what is value, then that would change everything… but the “utility” the “value” is entirely illusion atm… is speculative.

Follow above example… imagine you sell me that token. Imagine I do exactly the same.
Now imagine that we talk and only talk about the prospect that in future those tokens might have value … either a market into which we can sell or better real utility and perhaps a binding to real world assets ( which is a feature of coloured coins that could do that ), then having talked only… imagine we swap half a billion tokens. Nothing of value has occured… but we’d be liable for CGT on £500million each!.. I venture that Her Majesty’s Arse is full of shite… and while those who work might choose to wave this as an inconvenient example that is not liable… how the feck do we know, until we are liable for more than ever existed!? but this is what cryptocurrency markets are atm… pure speculation. Most copy coins have not value or utility… many are just pump and dumps fleecing noobs. It’s always been that way and HMRC should already understand the basic realities of this.

It’s absurd as it stands and worthy of contempt… AND where there is a better option available… charging at the boundary of fiat as it is and working to re-enforce that potential that crypto has.

I expect too much from those who represent me as Government… :thinking:

6077

Unless one of you sold the other the tokens for £500 million each, why would anyone be liable for such a figure? The pair of you agreeing they are worth X is not the same as one of you stumping up X.

CGT is about HMRC having a cut of the profits - the gains. Two folks imagining they are worth something is not the same as what the market (others) will pay. It also isn’t the same as one of you actually paying the other what you say they are worth.

I suspect that if there was a market of two delusional people, swapping something with no evidence of value, HMRC wouldn’t give a monkeys.

6078

There are tricks that people use via both on and off-shore corporations - it takes creativity because you don’t want to break the law, just wind up so that you don’t have profits, yet can still be the beneficiary of your wealth - and there are many ways to achieve this if you put in the effort.

Also, if you have enough wealth (and I expect you will in time if you don’t now), you can get residency in other countries where the tax burden is not so onerous. Go where you are treated best IMO.

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6079

Indeed.

You’re logic is broken.
It’s called induction hypothesis… one step is true, then follows for others.
The illustration of two people agreed to a price of one token is allusion to a market of many agreeing the same. There is no difference in the reality that the market means nothing, until the token is recognized - which is at the boundary with a legal object - be that real world object or fiat.

Some would argue fiat is bogus but that does not appreciate what fiat is - still, there is a confusion that fiat causes in this… making people jump from what they know, to something new and making assumptions about it. Point being, a reasonable person would not necessary anticipate that the HMRC or any other would fall down that path they have chosen - it is not consistence with other CGT or with a good proper sense for what cryptocurrency was and still is … there is a tipping point perhaps where a token is stable but I don’t see any that could not collapse to zero in a heart beat.

Some would wonder there is an assumption there that people are subscribed. Personally I don’t mind that Government does look to raise taxes in that way but they have got to do it right.

and here is the problem:

There is no way to know… why suspect it?.. that is not reasonable from them.

As above, the market of two is no different to the market of 200 or 200,000 delusional people - who know not but suspect the value that they could realize… the test, is only at the point of action into fiat… on shallow markets the spot price does not reflect the reality of what can be realized… that should be obvious.

The onus is on the HMRC to set out guidance that is not ambiguous… that does not risk a big unknown; that does not post date action against vague guidance that is fishing for what they can exploit in the future… far beyond the reality of what was participation is… they are by taxing transaction stifling innovation… and risking new markets crashing by forcing payment of some [insert random decision making] about how much is owed by whoever is gullible enough to engage with ambiguous. Some will follow through the process they set out, expecting it to be ok and getting snapped in this trap. Tax is meant to be simple and boring… what HMRC is doing is complex and stressful.

I could go on about other errors but the process is broken… they have not a good feedback loop to get this corrected. As such, default has to be to treat with contempt that broken process - to do what is possible for an individual but no more.

Again, this is not rocket science but they have fudged up and it needs a fix… which is as was suggested is tax at the fiat boundary and shoring up their arguement for future. If they really must attack transactions, then they should be looking to limit that damage to markets that can sustain that burden without compromising development of the innovation - atm ALL the markets are about innovation seeking potential utility, not actual.

Given this is relatively obvious… I suspect they are deliberately trying to stifle crypto; so, they can inflict a centralized and hobbled controlled version of it. We know that BoE and others are researching this and there’s reason they might - I replied to the open call on Digital Currencies a while back and suggest why… but to kill innovation is stupid… not that that will stop them! :roll_eyes:

Enough on a boring topic for a Friday evening… HMRC wasting my time!!

6080

I can’t compete with your time to write expanded answers, so apologies for cherry picking salient points.

I don’t believe my logic is broken at all. HMRC have to pick a reference point to assess the value of something. They could just ask for X percentage of Z token, but what if it isn’t divisible? Also, why should they carry the exchange risk, when they make the rules?

This may not feel fair, but it is how the treat barter too.

To be clear, if it has no value, they won’t be interested. They want a cut of the gains, if they exist.

Of course! It is a threat to the the state and its central banking system. It threatens their monopoly on money. They aren’t going to give that up easily.

6081

You’re making definite statements, without basis for doing so.

They should write guidance clearly, in a way that is not open to interpretation.

You make it sound like organized crime. Exploitation with menaces.
No time to disagree.

6082

Big Jim Cramer at CNBC tells viewers risk-flight captital going to crypto instead of gold! I have no respect the dude, but he’s got a big audience.

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6083
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6084

The Industrial Strategy Grand Challenges

We will put the UK at the forefront of the artificial intelligence and data revolution.
We will maximise the advantages for UK industry of the shift to clean growth.
We will become a world leader in shaping the future of mobility.
We will harness the power of innovation to help meet the needs of an ageing society.

Summary of commitments

Facing the future

  • We will establish a Regulatory Horizons Council to identify the implications of technological innovation and advise the government on regulatory reform needed to support its rapid and safe introduction.
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complements other government levers such as taxation and public spending in shaping our economy.

which help to stifle innovation!

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