Business

Dan Taylor

UK taxman demands customer info from crypto exchanges: report

Tax authorities in the U.K. are applying pressure to major cryptocurrency exchanges to divulge information about their customers and their transactions, in the latest clampdown on tax evasion through cryptocurrency, CoinDesk reported.

HM Revenue & Customs has asked exchanges to submit transaction histories, which it intends to use to detect individuals who have been trading in cryptocurrency without declaring their gains for tax.

Sources close to the matter told the crypto news outlet that three exchanges have been served with notices this week — namely Coinbase, CEX.IO and eToro. None of the three firms has so far been available for comment.

An industry insider said it was likely HMRC would ask for details for the last couple of years as part of the first round of investigations: “HMRC is looking to work with exchanges when it comes to finding information on people who have been buying and selling crypto. I think they will only go back a couple of years, two or three years.”

The source noted that if the authorities choose to look back just a couple of years as expected, this would likely miss those that made the bulk of the gains from earlier years of cryptocurrency trading, while catching those that got involved at the peak of SegWitCoin (BTC).

“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,” according to the report.

Following a Freedom of Information (FOI) request from CoinDesk, HMRC refused to divulge information about its activities, citing concerns about the potential impact on tax collection of revealing its true activities: “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 follows similar steps from tax authorities elsewhere, most notably the IRS in the U.S., towards recovering unpaid tax on cryptocurrency transactions.

Note: Tokens on the Bitcoin Core (SegWit) chain are referenced as SegWitCoin BTC coins. Altcoins, which value privacy, anonymity, and distance from government intervention, are referenced as dark coins.

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