- HMRC is gathering information from foreign cryptocurrency exchanges and tax authorities on UK users
- The tax office is looking for data on UK users’ trades, deposits, and withdrawals
- The searches date back to the 2017 bull run when guidance was fuzzy
HMRC, the UK tax office, is actively collecting information from foreign cryptocurrency exchanges and tax authorities in attempts to claw back unpaid taxes as far back as 2017. In news that will send a shiver running down the spines of those who haven’t declared their cryptocurrency earnings over the past four years, HMRC is using its considerable influence to collect trading records, deposit and withdrawal records, and a myriad of other information from exchange users, information it will match up with tax return records to spot any outliers.
HMRC Information Gathering is No Surprise
The news that HMRC is digging deep into crypto records won’t come as a surprise to anyone, but it is still a reminder that the tax man will always find you. Legal firm Gherson Solicitors broke the news earlier this month on the back of a freedom of information request, cleverly using the fear of a tax investigation and potentially penalty to try and drum up clients.
Gherson’s request revealed that HMRC is collecting information such as personal data in the form of names and addresses from cryptocurrency exchanges, frequency of transactions/trades, and the value of crypto assets held by clients. Significantly, it is looking at data as far back as 2017 when many entered the cryptocurrency market for the first time.
Coinbase Already Targeted
In October last year Coinbase revealed that it had been approached by HMRC who were looking for similar records, but the exchange managed to limit the request to customers with a UK address who received more than £5,000 worth of crypto assets into Coinbase during the 2019/2020 tax year.
In the UK, capital gains tax is due on any and all transactions made by an individual, not just those back into fiat. Many who joined the space in 2017 won’t have been aware of this until much later, and with exchanges often only keeping records for a few months, obtaining this information retrospectively will be difficult. Equally, the rules on cryptocurrency were vague during the 2017 bull run, leading to some having to make their own calculations which will inevitably have led to errors.