Her Majesty’s Revenue and Customs (HMRC), the UK’s tax authority, has announced that it is seeking alternatives to the current tax treatment of Bitcoin.
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Bitcoin purchases in the UK are currently carry a 20% value added tax (VAT) and one option under review is the reclassifying Bitcoin as private money, with a consequent VAT limitation on transactions.
This was the option chosen by Germany’s central bank, the Deutsche Bundesbank.
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By GlobalDataAn HRMC spokesman said that they had held "constructive meetings with stakeholders" over VAT on the currency.
HRMC is driving the review as a response to the growing concern and search for regulation on the currency expressed by various central banks, such as the Chinese, Dutch and Norwegian ones.
In 2013, Bitcoin’s world stock has risen from $150m to $10bn.
Bill Dodwell, head of tax policy at Deloitte, said: "Many large businesses will be put off from accepting virtual currencies such as Bitcoin given the fringe nature of the industry and lack of transparency.
"That’s not to say that a cryptocurrency will not succeed in the future.
"HRMC clarifying its tax treatment will give more certainty to participants in the market and over the transactions taking place.
"This may boost confidence in cryptocurrencies and lead to wider adoption."
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