If you bake pies at home and sell them to friends, do you have to register yourself as a business? There might be benefits to it but he could also just be self-employed. As long as he declares his earnings and pays taxes on them there shouldn't be a problem.
If it is strictly "to friends" in a way that is not legally to the general public, possibly not (but if you are soliciting people in public places, then its probably public sales.) For public sales of food, you probably need both a business license and separate health clearance for selling food, if your state law even allows selling food made in a home kitchen (California recently adopted a law allowing this, with very narrow limits.)
You can make a certain amount of capital gains in the UK without paying tax. It's in the region of 10K I think. I guess buying bitcoin at market price and selling at 'a different market price' counts as capital gains on an investment until the point where you've made enough money to have to declare it. And this would be on your tax form at the end of the year.
At least that's how I understand it. I'm not an accountant but have been unloading a few coins this year and I'm pretty sure I don't need to declare anything until I make more than a certain amount across all my investments.
In the US, as I understand it you wouldn't be able to use capital gains on this kind of thing because you haven't held the Bitcoins for a year. It would be "short term capital gain" which would be the same as ordinary income.
The real risk here is that if you don't track all the transactions and report and pay taxes on the profit (at, likely, ordinary income tax rates), you'll get nailed for tax evasion.
I imagine (though I have no experience) that this must be similar to having a marijuana based business. If you want to be legit you have to open a bank account... but not a lot of banks want to touch a business like that.
You might think you could just lie on the bank account opening form where it asks about what the business will be doing, and say you're opening a coffee shop or food cart (something with cash sales), but then you could be nailed for lying on a form, and since (again in the US) most accounts are FDIC insured, that could be under the rubric of lying to the Federal government (not good).
I don't have direct experience with this, IANAL etc., but these are some loose concepts that come to mind.
Too bad, great idea, classic good example of arbitrage/exploiting market inefficiencies. I think it's even do-able legitimately, though it's slightly too far along the risk-reward curve for my taste ATM.
Whether or not you have to pay taxes on the proceeds of the endeavor is an orthogonal question to whether or not you need a business license to engage in the endeavor.
I think (he/a contractor/a company) basically doesn't need to write a tac return/declare income if they make less than £10.5K gross a year, the threshold for completing a tax retirn as far as I know.
You don't have to register a business per se in the UK. If you're self-employed you have to tell the tax authorities even if you're making trivial amounts of money.
For me it looks like this is obviously illegal because he conducts a business without registering one.