The UK taxman has scored a success in its ongoing attempts to obtain details about UK holders of crypto-currencies. UK residents who have invested through the American based firm Coinbase will have their details passed to HMRC.
In 2019 HM Revenue and Customs sent formal Information Notices to a number of crypto-exchanges, demanding details of UK residents who had moved money using the exchange between 2017 and 2019. HMRC now seem to have had success with Coinbase. The online crypto-currency ezine Decrypt has reported the contents of an email from Coinbase to some of its UK customers. Coinbase is a global digital asset exchange company. It’s an online marketplace for buying and selling digital currencies (e.g. Bitcoin, Ethereum, Monero). It also sends information about those transactions to the blockchain network to verify those transactions. Coinbase also serves as a wallet, where the digital currencies can be stored. It is based in the USA and is available in over 30 different countries.
The email confirms that HMRC originally required all records for 2017 and 2019. However, after discussions with the tax inspectors, the Notice was revised to introduce some minimum requirements. Coinbase will provide the UK tax authority with details of “customers with a UK address who received more than £5,000 worth of crypto assets on the Coinbase platform during the course of the 2019/2020 tax year”.
UK tax residents have to pay Capital Gains Tax on increases in the value of crypto-currencies.
What does this mean for me?
If you have holdings in crypto-currencies it is inevitable that HMRC will receive information regarding that at some point. If you have not reported the transactions to HMRC you will be investigated. In addition to wanting to tax the capital gains, it is extremely likely that HMRC will want far more detailed information about the source of funds held in the crypto currency. Some investigations may be on criminal lines. You can avoid prosecution and (in a civil investigation) get significantly reduced penalties by making a voluntary disclosure.
How can Lynam Tax Disclosure Experts help me?
Our Tax Disclosure Specialists are highly experienced in managing Voluntary Disclosures to HMRC. We have the training, up-to-date knowledge, specialist skills, and the depth of recent and relevant experience to properly handle your disclosure to HM Revenue and Customs. We can reduce the stress and get the best possible result for you: even if you are already undergoing a Tax Enquiry. HMRC’s investigators are dedicated specialists: you need experienced and committed experts on your side.
Get a free confidential discussion with one of our experts today.
Paul Lynam: 0845 643 9997
Andrew Nutbrown: 07718 778710