My Client told me he was going to invest £20k in a spreadbetting account and told me he had read it was tax free so i looked it up and according to BIM22020 it would appear to be (and previous Aweb posts support this eg https://www.accountingweb.co.uk/any-answers/spread-betting-and-forex-trading ). Since he invested in mid May his £20k has gone up by nearly £5k so lucrative while it works....!
However he has just sent me a copy of the "Investment management agreement" relating to this £20k and he has not himself set up an online account with "spreadbettingrus.com"(made up name to avoid confusion) but has instead given the funds to a fund manager who has placed the funds in a "CFD (Contract for difference) and spread forex account" in the name of the investment manager and in return the investment manager guarantees a 10% return per month and any profits made are paid 70% to my client with 30% being retained by the fund manager as his fee.
To me this may not fall under the principal of the spreadbetting exemptions and the contract also states that "The Client agrees full responsibility for any/all personal liabilities regarding taxes." which i am sure is a cover all for them but i am not 100% sure.
My concern is that if it is classed as taxable he could have a large liability accruing - especially as he has told me that he now intends to invest a further £100k as his initial £20k has been so succesful (I have warned him of the risks but that is not my job i suppose - just felt i had to!)
Would anyone have any thoughts on this?