The FCA on Regulating Cryptocurrencies
The Financial Conduct Authority (FCA) has recently confirmed that firms that deal in cryptocurrency derivatives need to be duly authorised and regulated. This statement precedes a review of the cryptocurrency market due later this year, which was announced in the FCA’s Business Plan for 2018/2019. The review is a joint effort between the FCA, the Bank of England and the Treasury.
A cryptocurrency is defined as ‘a digital currency produced by a public network, rather than any government, that uses cryptography [codes which keep information safe in computer networks] to make sure payments are sent and received safely’. The first cryptocurrency was Bitcoin, and it is still the biggest, though other, ever more obscure-sounding ones have sprung up – such as Litecoin and Dogecoin.
Cryptocurrencies have grown in importance for both markets and regulators in recent years. The anxiety is justified, as the trading of cryptocurrencies constitutes a new and relatively unregulated market. The (now former) New York Attorney General, Eric Schneiderman, announced that his office has launched the Virtual Markets Integrity Initiative, a fact-finding inquiry into the policies and practices of platforms used by consumers to trade cryptocurrencies. The inquiry springs from concerns about the transparency and accountability of such trading – these are serious issues, given that the Bitcoin market reached $118bn at the start of April.
In the UK, neither the Bank of England nor the FCA regulates the trade in cryptocurrencies as such. However, in 2017 the FCA issued consumer warnings on cryptocurrency Contracts for Difference (CFDs) and the risks of Initial Coin Offerings(ICOs), where the issuer accepts a cryptocurrency in exchange for a proprietary ‘coin’ or ‘token’ related to a specific firm or project. The FCA warned that the value of cryptocurrency CFDs is extremely volatile and suffers from a lack of transparency, while ICOs are not FCA regulated and provide no investor protection in the UK. Moreover, the FCA held that trading in financial instruments with cryptocurrencies as the underlying assets – for example cryptocurrency futures, CFDs and options – is likely to require regulatory authorisation.
An Assessment to Tax is never ‘stale’, but it might be out of date: HMRC v Tooth
This article briefly discusses the key points arising out of the decision of the UK Supreme Court in HMRC v Tooth  UKSC 17. The case considered (1) whether a discovery assessment could become “stale” and (2) the meaning of the phrase “deliberate inaccuracy”.
VATA 1994 s.47, Agency, Onward Supply Relief, & Double Taxation
On 12 July 2021, the First-tier Tribunal (Tax Chamber) (“FTT”) released its decision in Scanwell Logistics (UK) Limited v HMRC  UKFTT 261 (TC), rejecting the taxpayer’s claim for onward supply relief (“OSR”).
Whilst OSR is now limited, post-Brexit, to goods imported into Northern Ireland for onward supply to the EU, the FTT’s discussion of agency under section 47 of the Value Added Tax Act 1994 (“VATA”) is of broader interest.
The case serves as a reminder of the significant financial consequences that can result from errors in tax planning, as Scanwell was ultimately held liable for £5.7 million in unpaid import VAT despite the fact that the imported goods almost immediately left the UK (which, if properly planned, could have meant Scanwell was relieved from liability to import VAT).
Draft Finance Bill 2022—tax avoidance measures
Helen McGhee, senior associate at Joseph Hage Aaronson LLP, considers the draft Finance Bill 2022 clauses published on 20 July 2021 in relation to tax avoidance and recent updates to the tax avoidance regime.
Getting Closer: A Global Minimum Tax on Corporations
On 1 July 2021, US Treasury Secretary Janet Yellen announced that countries representing over 90% of global GDP had agreed to a global minimum tax on corporations (“GMCT”). The GMCT seeks to put a floor on tax competition on corporate income through the introduction of a minimum corporate tax of at least 15%. Whilst certain elements give rise to positive expectations, some caveats should be noted. Much will depend on (1) the outcome of future political negotiations and (2) the detail of the drafting at international and national levels.
The DBKAG & K (CJEU) decision: an opportunity for investment funds?
On 17 June 2021, the European Court decided the joint cases K (C-58/20) and DBKAG (C-59/20) regarding whether the supply of certain services constituted the “management of special investment funds”, benefiting from the VAT exemption enshrined in Article 135(1)(g) of Council Directive 2006/112/EC.