Skip to main content

Post-functional money and VAT

I genuinely did not know this, having never been to either of the noted lap-dancing clubs Secrets or Platinum Lace, but such establishments require customers to buy vouchers, a private currency, to pay the dancers. The dancers do not, as you might expect in the modern world, accept credit cards (even contactless fnar fnar).

The customers are charged an entirely reasonable commission on the exchange of fiat currencies for the private currency. Presumably there are safety and security issues that drive the use of the private currency but I do remember reading about problems that occur in transactions of a similar context where the recipient, generally a marginalised woman, is presented with a collapsing currency (eg, Sterling) and cannot be sure of the value and therefore whether to accept the cash of note.

Anyway, for whatever reason, there is a private currency is circulation. As a result, the clubs are in a dispute with HM Revenue & Customs over whether they should pay VAT on the commission they charge for exchanging customers’ cash for vouchers to pay dancers. The clubs believe this commission, about 20%, is a financial transaction and so should be exempt from VAT. HMRC thinks differently.

(Wait, what? 20%? Are they using my agent?)

This story is an interesting example of the use of what you might call "company money". It’s akin to the use of chips in casinos or Disney Dollars. You change fiat currency that is good anywhere into a form of electronic money that is useful in only one area.

Comments

Popular posts from this blog

There is no excuse for not taking cards

So we went to the pub. For lunch. Seven of us. Say £20 per head. £100+ quid. Say £50 quid gross for the pub. Colleague goes to order food and drinks and pay at the bar. Apologetic barmaid comes over to explain that their “card machine” is down, so she can only accept cash. Under normal circumstances I would have simply walked out, feeling it wholly inappropriate to reward such a poorly managed establishment and, as a functioning actor in a capitalist economy, done my duty to depress their lunchtime takings. Here’s what we wanted to say: This is absurd. This is 2016 not 1916. Your card machine is down? Well, so what! Are you seriously telling me that mein host has no mobile phone number capable of registering for PingIt or PayM? That none of the staff or the pub itself have a PayPal account that I can send the money to? That neither the owners nor managers not contingency planners thought to tuck an iZettle behind the bar to use when the clunky and expensive GPRS terminal fails for o...

Financial Cryptography: Corda Day - a new force

Forum friend Ian Grigg, who I always take very seriously indeed on any such topic, wrote about Corda on his blog and concluded with a powerful statement. Bitcoin told the users it wanted an unstoppable currency - sure, works for a small group but not for the mass market. Ethereum told their users they need an unstoppable machine - which worked how spectacularly with the DAO? Not. What. We. Wanted. Corda is the only game in town because it's the only one that asked the users. It's that simple. From Financial Cryptography: Corda Day - a new force xxx It seems to me, however, what Ian is pointing to as the greatest strength of their approach is also the greatest weakness. A staple feature of unimaginative management consultants presentations about innovation is some variation on the statement by Henry Ford that if you had asked users what they wanted, they would have asked for faster horses coupled with some variation on the statement by Steve jobs that it was pointless ask...

We could fix mobile security, you know. We don't, but we could

Earlier in the week I blogged about mobile banking security , and I said that in design terms it is best to assume that the internet is in the hands of your enemies. In case you think I was exaggerating… The thieves also provided “free” wireless connections in public places to secretly mine users’ personal information. From Gone in minutes: Chinese cybertheft gangs mine smartphones for bank card data | South China Morning Post Personally, I always use an SSL VPN when connected by wifi (even at home!) but I doubt that most people would ever go to this trouble or take the time to configure a VPN and such like. Anyway, the point is that the internet isn’t secure. And actually SMS isn’t much better, which is why it shouldn’t really be used for securing anything as important as home banking. The report also described how gangs stole mobile security codes – which banks automatically send to card holders’ registered mobile phones to verify online transactions – by using either a Trojan...