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WPA POOL / POOL / GETTY IMAGES


THE BRIEFING Tax


BOOKIE PAYS OUT


HAVING WORKED AS A CASHIER in her father’s bookmaking business, Denise Coates was one of the fi rst to spot the potential for the internet to turbocharge the sports-betting industry. She remortgaged the family betting shops for £15 million and decided to take a gamble of her own. Two decades on, the bet has paid off – and then some. Bet365 has become Britain’s most successful bookmaker, with more than 60 million customers and an 8 per cent market share. Its success propelled Coates up the list of Britain’s richest women. But there is one league table that the Stoke City fan (her father owns the club) leads outright: the list of top UK taxpayers. In the most recent fi nancial year, the Coates family (Denise, her father Peter and brother John) contributed a total of £573 million to the exchequer: enough to pay the state pensions of 67,725 retirees. The annual tax bill is equivalent to 8 per cent of the family’s estimated £7 billion wealth. A sizeable proportion of that sum comes from the taxes paid on Coates’ own salary. As joint chief executive (alongside her brother) and controlling shareholder of Bet365, she eschews dividends and instead paid herself a salary of £421 million, all of which was subject to the same income tax rules as the company’s 5,000 other employees. Coates has also donated £90 million to charitable causes in a single year. While her status as ‘Britain’s biggest taxpayer’ might


have made headlines, Coates remains stubbornly publicity-shy. She once told an interviewer that she could walk through the streets of her native Stoke-on- Trent (Where Bet365 has retained its headquarters) without being recognised whatsoever. Some years on, that may well still be true. RJ


Cryptic crypto


IN THE UK THERE ARE no taxes that apply specifi cally to cryptoassets such as bitcoin or ethereum. Anyone holding them as a personal investment is subject to capital gains tax (CGT) on their profi ts, which need to be reported by self-assessment. In some circumstances, cryptocurrency-related activity may constitute ‘trading’ and may be subject to income tax, but this is rare, notes Charles Russell Speechlys tax partner Dominic Lawrance. ‘It’s quite unusual for the facts to indicate that an individual who is buying or selling investments is “trading”,’ he tells Spear’s. High- frequency transactions may be considered an exception, but ‘most people who hold crypto as an investment are not “trading”’. Could the equation change? In March, HMRC published an internal manual on cryptoassets – its fi rst since 2018 – setting out its current thinking and offering a preview of how things may change. The guidance is not yet law, and HMRC suggested that views ‘may evolve further as the sector develops’. The manual broadened the taxman’s defi nition of cryptoassets to cover areas such as utility tokens (which provide access to goods and services) and security tokens (access to rights/interests in a business). HMRC does not consider cryptoassets to constitute money or currency, but individuals who have received them as a form of non- cash payment could be subject to income tax and national insurance. The guidance also stated that cryptoassets should be treated as if


they are located where their owner is resident. ‘This will or would – if it’s upheld in the test cases that will inevitably come – have signifi cant tax consequences for non-domiciled individuals or accidental UK residents who hold cryptoassets,’ says Alex Ruffel, international tax partner at Irwin Mitchell. If a client is resident or domiciled in the UK, then under current guidance profi ts are ‘probably reportable’, Ruffel says. If non-domiciled, investors should ‘certainly look at whether to hold their cryptoassets themselves or place them into a holding vehicle to protect them from taxation, in the same way as such protection is afforded to other assets’. So, what does it all mean for investors now? It is almost certainly wise to record and document any crypto dealings, even for transactions involving tokens or holdings that that are not covered by existing legislation – such as NFTs – and take advice on how to disclose signifi cant gains. An adviser might even suggest disclosing certain dealings and arguing that they are non-taxable, on the basis that this could guard against possible future penalties that may result from changes that come into force further down the line. ‘Almost every tax authority, including HMRC, is playing catch-up,’ says Ruffel. ‘But catch up they almost certainly will.’ AK


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