A new member and many questions

A new member and many questions · by **BenScoobert** on Fri Jul 22, 2011 2:30 pm

Hi
Thanks for reading my 1st post.

We are in the process of setting up some managed accounts for forex trading, we have decided to create a Ltd company with my wife as 100% shareholder as she has no income at the moment.

So, few questions....sorry to put them in the not classified section, but at the moment I don't know which area they come under, hence the questions...

1. Are currency trading gains from the foreign exchange taxable at a personal level and/or a company level?
I've read 3 versions varying from tax free like spread betting, to normal income tax applies and even CGT applies.
My thought was to withdraw any profits and trade them personally to be tax free, but now I'm unsure of the tax status of it.

2. If we make over £73k, do we need to be VAT registered? Are there any exceptions we can use? A significant portion of the income will be from commisions on investor's account gains, I guess they are a VATable item. Gains on our company trading account, I beleive, are not a VAT item as it is just an investment/trade of company money. Is that right?
Any way around this as an investment group or something like?

3. Do we need to be FSA registered? From what I see, as long as we are not taking deposits/funds from customers and not soliciting for business then I think not.
Our clients will open an account with the forex broker and deposit funds, we will trade them under a limited power of attourney and the broker will debduct a pre-agreed commision from profits and credit it to our account. The broker will be a swiss broker which is FINMA regulated (Swiss version of FSA), using their PAMM system.
http://www.dukascopy.com/swiss/english/management/solutions-for-money-managers/asset/ nice little graphic here explaining PAMM structure if you haven't come across it before.
Any thoughts on this? I'd really rather not be FSA tethered.

Thanks in advance for any responses.

B

Re: A new member and many questions · by **Kitty Kat** on Fri Jul 22, 2011 3:46 pm

Take this with a pinch of salt...

1. I am pretty sure if your company does the trading, any forex gains would be the company's and so it would pay Corporation Tax.

2. Have a look at http://www.hmrc.gov.uk/vat/forms-rates/rates/goods-services.htm#9 , specifically the Financial Services section near the bottom.

3. I have no idea!

Re: A new member and many questions · by **BenScoobert** on Sun Jul 24, 2011 4:00 pm

Kitty Kat wrote:Take this with a pinch of salt...

1. I am pretty sure if your company does the trading, any forex gains would be the company's and so it would pay Corporation Tax.

2. Have a look at http://www.hmrc.gov.uk/vat/forms-rates/rates/goods-services.htm#9 , specifically the Financial Services section near the bottom.

3. I have no idea!

Thanks for the response,

1. I'm sure the company will pay CT, and from what I can see spot forex is not tax free like spread betting is. So that will be the cheapest way.

2. We do appear to not come under VAT with our intended services.

3. I'm not even sure the FSA can answer this one, they are a real nuisance.

Re: A new member and many questions · by **Generix** on Tue Jul 26, 2011 12:13 pm

BenScoobert wrote:3. I'm not even sure the FSA can answer this one, they are a real nuisance.

Probably more so if you fall within the scope of them

Re: A new member and many questions · by **section 44** on Tue Jul 26, 2011 1:13 pm

3 - it sounds like it would be a regulated activity. Remember that, where the FSA is concerned, it is substance over form.

Re: A new member and many questions · by **BenScoobert** on Thu Jul 28, 2011 11:48 pm

I may have found an exception, but my legalese is not great, below is the page which the paragraph is from and a paragraph I feel applies.

In my mind this says that if the trader also has his own money involved in the trade then it is a valid exception not to be within the FSA's remit.
Does anyone else agree that this is what this means in plain English?

If it does that is great because I will always trade my own funds alongside customer's funds anyway, in my opinion if a trade is right then you have to put your own money on the line to install customer confidence in your skills.

http://www.legislation.gov.uk/uksi/2001/544/part/II/chapter/VI/made

Arranging transactions to which the arranger is a party
28.—(1) There are excluded from article 25(1) any arrangements for a transaction into which the person making the arrangements enters or is to enter as principal or as agent for some other person.
(2) There are excluded from article 25(2) any arrangements which a person makes with a view to transactions into which he enters or is to enter as principal or as agent for some other person.

Re: A new member and many questions · by **section 44** on Fri Jul 29, 2011 10:57 am

No I don't agree.

If your interpretation was correct then that would mean that it would be possible to avoid having an unregulated collective investment scheme merely by the operator of that scheme aslo being a participant. That is not correct.

Re: A new member and many questions · by **BenScoobert** on Fri Jul 29, 2011 11:11 am

section 44 wrote:No I don't agree.

If your interpretation was correct then that would mean that it would be possible to avoid having an unregulated collective investment scheme merely by the operator of that scheme aslo being a participant. That is not correct.

What is your interpretation of this exclusion?