HMRC cracks down on crypto investors
HM Revenue and Customs (HMRC) is cracking down on possible tax evasion by asking cryptocurrency exchanges to reveal customer data, writes Jane Connolly.
According to a report by CoinDesk, the tax authority has written to at least three exchanges operating in the UK – Coinbase, eToro and CEX.IO – to request lists of customers’ names and transaction histories.
The exchanges did not comment on the story, but a source tells CoinDesk that HMRC would probably only look at up to three years’ worth of transaction data.
“The ones who probably made the largest gains won’t be affected”
They add: “If they [HMRC] do only go back two or three years, I think the interesting thing here is that the individuals who went into crypto very early on in 2012-13 will not be affected. The ones who probably made the largest gains won’t be affected, it will be the people who came in around the time crypto peaked.”
HMRC defines a taxable event as users selling their cryptocurrencies or swapping them for other digital assets. Holders are liable to pay Capital Gains Tax on crypto in the UK and could face a tax charge of up to 20% of a transaction’s value, depending on income and capital appreciation.
The tax authority withheld details about its requests, but confirmed to CoinDesk: “These exchanges can retain information on their clients and the transactions that they have completed. These transactions may result in potential tax charges and HMRC has the power to issue notices requiring exchanges to provide this information.”
HMRC’s move follows action taken by the US Internal Revenue Service (IRS) last month, in which the authority wrote warning letters to more than 10,000 Americans who it says did not report virtual currency transactions properly.
