HM Revenue & Customs (HMRC) plans to investigate cryptocurrency investors in a bid to crackdown on tax evasion, a report suggests.
According to specialist news site Coindesk, the taxman has asked some of the biggest cryptocurrency exchanges, including Coinbase, CEX.IO and eToro, for details about their customers’ transaction history.
HMRC confirmed its position on cryptocurrency in December 2018, citing that individuals will be liable to pay Income Tax and National Insurance Contributions (NICs) on cryptoassets that they receive from their employer as a form of non-cash payment or through ‘mining’.
Mining is the process in which transactions for various forms of cryptocurrency are verified and added to the blockchain digital ledger.
Individuals who hold cryptoassets as a personal investment, for the purpose of capital appreciation, will also be liable to pay Capital Gains Tax (CGT) when they dispose of their cryptoassets.
But it appears that HMRC is now enforcing its position, with one industry expert suggesting that the regulator is now working with cryptocurrency exchanges to find information on people who have been buying and selling assets.
“I think they will only go back a couple of years, two or three years,” said the expert, who wished to remain anonymous.
Commenting on the speculation, an HMRC spokesperson said it cannot comment on ongoing enforcement activity. However, it did confirm that it had the appropriate powers to force currency exchanges to hand over information.
“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,” said HMRC.
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