The IRS equivalent in the UK – HM Revenue and Customs have sent out letters to three prominent Exchanges. Recently, the IRS in the US as well sent out letters to over 10,000 crypto-users after potentially obtaining the list from Coinbase last year.
Reportedly, HMRC has sent out letters to Coinbase, eToro, and CEX.io. The agency has requested for customer names and their transaction histories on these Exchanges. The people in the UK are looking to pay a capital gains tax on the profit from crypto trading.
According to sources,
“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.”
The move comes about seven months after the tax agency had released its tax legislation directive for private cryptocurrency holders. Hence, the accountants and even online platforms will look to extend support to the users to help them calculate the taxes according to the directives.
eToro, one of the Exchanges which has received the letter has a tax guideline already in place. Amy Butler, the global head for PR and communications at eToro tweeted,
Confused about tax and crypto? We’ve made a guide and a tax calculator for UK residents (link: https://etorocryptotax.com/)
Moreover, Coinbase is one of the oldest Exchanges in the list which can date customers’ data back to 2012. Furthermore, the authorities will be keen on analyzing the taxes of people who booked profits during the 2016-2017 crypto bull run.
The US had begun the process of collecting data from Coinbase last year and this year it sent notices to potential defaulters. The HMRC is expected to follow a similar procedure. It also provides time for un-informed users to analyze their liabilities and clear debts.
What is the quantum of the tax that the UK authorities stand to generate? Please share your views with us.
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Nivesh from Engineering Background is a full-time Crypto Analyst at Coingape. He is an atheist who believes in love and cultural diversity. He believes that Cryptocurrency is a necessity to deter corruption. He holds small amounts of cryptocurrencies. Faith and fear are two sides of the same coin. Follow him on Twitter at @nivishoes or mail him at nivesh(at)coingape.com