Tax on internet ad sharing income

Tax on internet ad sharing income

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I have been approached by a potential client, a UK resident, who seems to be making money from buying into an internet ad sharing scheme. I haven't been told the name of the scheme operator, but a bit of Google research suggested that it is similar to the one being run by Traffic Monsoon. Most of the Google reviews of Traffic Monsoon (based in Utah, USA) and its owner (Charles Scoville) are quite scathing and it does appear to be a massive Ponzi scheme, i.e. it relies on new "investors" to keep chucking money in so that "profits" can be paid out. In that case, it is highly likely either that the new members will slow down so that the money dries up and nobody gets paid out, or the US authorities will close the scheme down.

This is one of the reviews, that gives a bit of detail on how it is supposed to work, but it is clearly written by someone for whom English is not their first language:

http://www.newsonlineincome.com/traffic-monsoon/

However, in the meantime, I need to decide how any income is taxed. Investment or trading? If the latter, then possible VAT implications? My prospect says she invested £1000 at the outset and, despite "re-investing" (i.e. purchasing more Ad-packs), she is actually £800 up plus the return of her initial investment, so that £800 at the very least needs to be taxed somehow.

Any thoughts on this from the esteemed AWeb community?

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By Malet
11th Feb 2016 09:49

Google

After a google of Traffic Monsoon, I find it hard to believe your potential client does not feel like like this is a ponzi scheme.

Paypal have pulled the plug, and the owner has decided (after having 10+ previous ponzi schemes) to "set up his own bank in Dubai". 

In any case, this is a trading activity. The 'investment' is not an 'investment', it is a purchase to advertise your website/link in a closed loop to other members, and the income is derived from viewing other members of this closed loops adverts. 

Seen this many times before...

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