- Cryptocurrency trading is against furlough payment rules if conducted during an individual’s regular working hours
- HMRC is stepping up investigations as it wants to claw back as much furlough money as it can
- Traders could argue that anything that could result in a loss can’t be considered extra work
Cryptocurrency trading while being on furlough due to the coronavirus is illegal in the UK if you do it when you would normally be working it has been revealed, and the tax authorities are ramping up their investigations. Having put investigations on hold in April due to the impact of the coronavirus, the UK’s tax authority, HMRC, is now reinvestigating the cases it paused and also looking for examples where individuals and companies have taken financial advantage of the coronavirus support payouts which, apparently, includes internet trading.
Cryptocurrency Trading During Working Hours is Supplementary
Furlough schemes in the UK began in April 2020 under certain conditions, one of which was that employees on furlough were not allowed to take on other work during their existing working hours. This means that those working regular office hours of 9am-5pm could have taken on evening and weekend work but nothing else, with online trading like cryptocurrency trading apparently counting as supplementary work.
This stipulation will come as a surprise to those who enjoy stock, commodity, and cryptocurrency trading who likely won’t have been aware that these activities, which can naturally result in a loss as well as a profit, have been considered supplementary work since day one. Clarification on the matter didn’t come from HMRC themselves but from an interview with a tax firm in The Telegraph:
…the Revenue would be looking at whether people on furlough were working when they were not supposed to, investigating matters such as internet trading during lockdown.
For many, this is the first they will have heard that online trading counted as supplementary work, and will therefore be worried that they have been doing it when they shouldn’t, although they have a case to argue that work that could result in a loss can’t really count as work.
Tax Authorities Have Better Data Than Ever
Those engaging in cryptocurrency trading when they shouldn’t have been (whether they knew about this or not) may feel like they are under no pressure due to the industry’s decentralized status and far flung exchanges. However, as we have recently found out through the activities of the likes of Coinbase, tax authorities are getting better access than ever to cryptocurrency exchange data, meaning that those who previously thought they were untouchable may be anything but.