I started a small bitcoin mining and cryptocurrency trading ventures in December 2017 as a sole trader or self employed. I did not include this on my Self Assessment for tax year 2017/2018 (05 April 18). The mining is still in operation.
Can I prepare an 18-month income statement for my Self Assessment tax year 2018/2019? And claim AIA?
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No. The 2017/18 return should include trading from Dec 2017 until 05/04/2018.
2018/19 will depend on when you make your accounts up to. If it's an 18 month period then you won't have an accounting period ending the tax year so you would time apportion 12 out of 18 months of the accounts in 2018/19.
Probably better to prepare accounts to align with the tax year, especially if you have profits in either of these two periods as this way you can avoid overlap profits.
The mining is probably trading. The 'trading' might or might not be, you would need to look at the whole activity.
The mining is probably trading. The 'trading' might or might not be, you would need to look at the whole activity.
On what basis have you concluded you are trading?
I think the OP is on top of all that detail. He's a clever Bitcoin trader making millions. We are boring accounting drones giving free advice.
We are boring accounting drones giving free advice.
Not me mate. I was just asking a question. (And the OP doesn't sound to me to be on top of anything.... ahh, you were being sarcastic.)
Mining can amount to trading, sure. Equally, it can not amount to trading, as I'm sure you know. Hence the question.
Indeed. But not necessarily trading income. On what basis have you concluded you are trading?
The problems come when he makes losses.
if he's trading then he may be able to use them. If not not
Just do whatever. HMRC won't check or query it. Sometimes I draw accounts up to 31 March, sometimes I draw them up to exactly 6:03pm on the third Friday of June. Sometimes I make them up for the last 16 months and included an arbitrary estimate for the next 3. Create some juicy overlap to baffle and confound me at a later date when the rum runs out and I pull my head out of whichever public toilet it landed in. It just depends on how frisky I'm feeling at any given moment.
I would politely suggest that, if you are doing this seriously and for profit, then you hire yourself an accountant.
For one thing, it's pretty obvious that you are mentally using the cash basis (without even being aware of such a thing). That might not be best. For another, there's no chance of you getting it right without help.
If you're not going it seriously and for profit, you can if you want forget the accountant - but you're not trading and won't get any relief for losses.
Would be awfully nice to treat it as a trade, claim AIA on all that expensive and unprofitable mining rig (read: gaming PC) and claim income tax relief on the lot.
May as well claim new trader relief to carry it back 3 tax years too.
Wow. You spent a few hundred smackeroonies on a GPU.
You've convinced me you're self employed.
Not.
Then I suggest you find the funds to pay an accountant to help sort out the mess you are in the process of making.
But save you a lot of penalties.
You've already (on your reckoning) submitted one incorrect tax return - and your proposed solution is to submit a second incorrect return.
Anyway, at least you have the sense to accept the advice.
I suspect when you make your amended return, HMRC will open an enquiry (it seems from what you say that there will be a loss claim and that often attracts their attention). You will then discover that they do not readily accept that activities such as this amount to trading. It does depend on facts and the commentary they published in December last indicates the type of thing you would need to consider. Based on the little I know, few people in your position are likely to be trading, it simply isn't viable. Many estimate that the cost of electricity alone would exceed any income generated and you do have to compare your activity with, say, the warehouse type arrangement that real traders use.
In all this I think I can say I agree with others. Do nothing till you have consulted a knowledgeable, professional.
No-one is suggesting you are dishonest, simply that you do not understand the legislation and (more importantly) case law on the subject, particularly about what is and is not trading. What you believe is hardly relevant.
Nor in fact can I or anyone else say categorically, that you are or are not trading. It depends on the facts and there will be very many such that have a bearing on the issue. So, I repeat what I and others have said, you really need to employ a competent, professional or suffer the consequences.
The fact that you say you meet the 4 points tells anyone who knows anything about the subject, that you are not one of their brethren. The stores (electronic and otherwise) of HMRC are filled with cases of people who knew as much as you and were equally wrong. But good luck (though clearly you will believe that luck will have nothing to do with it).
Bear that lesson in mind (mined?) for your cryptoassets. There are two types: those within the CGT regime (bought - or bored and retained) and those within the income tax one.