A Montblanc production mandate on the books in United Kingdom.

What the business has signed.

A production mandate with Montblanc Capital Ltd, a company registered in Dublin, Ireland, under an Allocation Agreement. The business pays a mandate price at signature and in return holds a contractual right to the Bitcoin produced by a defined quantity of hashrate, on infrastructure Montblanc owns and operates, from the signature date to the April 2028 Bitcoin halving. Electricity is invoiced monthly in fiat and passed through at cost. Production is credited to the business daily on a public, signed ledger and settles on-chain each month to a hardware wallet the business controls. At term end a credit of 25% of the mandate price applies against a next-cycle mandate. The business acquires no hardware, no interest in specific machines and no share in Montblanc: it buys a service with a fixed term and a fixed price. Typical counterparties are a limited company or an LLP preparing accounts under FRS 102 or FRS 105, or an unincorporated business on the cash basis.

The documents the business receives.

Everything below is issued to the business in its own name and can be handed to you as it stands.

• —The proposal: contracted hashrate, mandate price, term, the projection the economics engine produced on the day, and the electricity rate.
• —The Allocation Agreement, signed digitally by both parties, with the Risk Disclosure Document it references.
• —Monthly electricity invoices in fiat, itemised, with running balances.
• —The public ledger: one signed entry per day for the business's wallet ID, publicly verifiable against Montblanc's published key, and one signed entry per monthly on-chain settlement with the Bitcoin transaction ID.
• —Monthly and annual statements of production, settlements and electricity, in BTC and in fiat at the day's rate.

The mandate price.

A payment at signature for a service delivered over a fixed term.

• —Companies prepare accounts under FRS 102 (or FRS 105 for micro-entities): the payment is a prepayment, released to profit and loss over the months of the mandate. It is a service, not a fixed asset: no hardware is acquired and no right to specific machines exists.
• —Corporation tax follows the accounts (CTA 2009 s. 46) and the expense is revenue in nature, incurred wholly and exclusively for the trade (CTA 2009 s. 54). The main rate is 25%, with the small profits rate and marginal relief below the thresholds.
• —Unincorporated businesses on the cash basis (ITTOIA 2005 s. 25A) generally deduct the payment when made.

Electricity.

Invoiced monthly in fiat and passed through at cost. An ordinary revenue expense of the period, with quantity, rate and period on each invoice.

The Bitcoin received.

HMRC's Cryptoassets Manual sets out the treatment for businesses (CRYPTO40000 onwards).

• —Units produced under the mandate are receipts of the business at their sterling value on the day they are credited. Whether they are trading income or miscellaneous income depends on whether the business's activity amounts to a trade on the ordinary badges; either way the sterling value on receipt is the amount brought in.
• —Held units are assets of the business. HMRC's manual explains when tokens are trading stock, when the chargeable gains rules apply and when the intangible fixed assets rules do not. For most companies holding units produced under a mandate, a disposal gives rise to a chargeable gain or loss against the sterling value on receipt.
• —The daily ledger gives the quantity per day; the monthly statement gives the sterling value at the day's rate.

VAT.

Montblanc Capital Ltd is established in Ireland, outside the UK, and supplies a service to a business customer.

• —The business accounts for the VAT under the reverse charge on services received from overseas suppliers (VATA 1994 s. 8) and deducts it as input tax under the ordinary rules; the invoice carries no VAT.
• —The Bitcoin itself is outside the scope: exchange of Bitcoin for sterling is exempt, and receiving produced units is not a supply by the business.

The renewal credit.

At term end the business holds a contractual right to a 25% reduction in the price of a next-cycle mandate. Nothing is paid out, and the right lapses if no next mandate is signed. It is generally read as a conditional price concession on a future contract, with no entry until it is used, rather than as income at term end. Your reading governs.

Substance.

The General Anti-Abuse Rule (FA 2013 Part 5) and the purpose tests in the specific regimes scrutinise arrangements whose main purpose is a tax advantage. The mandate is a real service with a real cost: hardware procured and run for the term, electricity invoiced monthly, Bitcoin produced every day and settled monthly to a wallet the business controls, a fixed term. The business carries the economic risk of the Bitcoin price and of the network. Montblanc describes the mandate as a business expense that produces a business asset, and nothing else.

Points to settle with your client.

• —The accounting framework (FRS 102 or FRS 105) and the release profile of the prepayment.
• —Trade or non-trade for the receipts, and the year-end valuation of the units held.
• —Custody: the business holds the keys to the wallet the Bitcoin settles to. Document the wallet as an asset of the business from the first settlement.
• —VAT registration and the reporting of the reverse charge on the return.
• —Digital record-keeping under Making Tax Digital: the ledger entries, the invoices and the statements are the primary records.
• —Montblanc does not provide tax advice, does not file returns and does not structure entities. This brief states what the contract is and how it generally presents; you map it to the rules that apply to your client.