HMRC’s crackdown on cryptocurrencies

Bitcoin Investors are likely to receive tax bills regarding their holdings as HMRC begin to write to some of the largest cryptocurrency websites.

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How has HMRC cracked down?

HMRC have reportedly written to websites such as Coinbase and Etoro to pursue information on customers who may owe Capital Gains Tax (CGT). CGT should be due, by law, on the profit made from the bitcoins.

Due to the anonymous nature of the bitcoins, it has been harder for HMRC to track the tax liabilities of the bitcoin holdings. The UK managing director of Etoro, Iqbal Gandham, stated that the request from HMRC for information was “no surprise” with Brazil and America also taking steps to tax bitcoin equities.

What is Capital Gains Tax?

When selling (or ‘disposing’) an asset Capital Gains Tax is the tax that is applied to the profit made from the sale. The gain that has been made it taxed but not the total sum of the money you receive from the sale.   

‘Disposing’ of the asset includes: selling it, gifting it, swapping it for something else, or receiving compensation for it, i.e. an insurance payout if lost or destroyed.

Do I need to pay tax on my cryptocurrency?

Yes, however, there could be limitations to this.

It is likely HMRC will now discover bitcoin holdings as they begin to contact the biggest cryptocurrency exchange websites.

Guidance regarding taxation of cryptocurrency was updated this year stating that gains from 2018-19 should be recorded and taxes should be paid by January. It was also stated that losses should be declared also as they can be offset against capital gains.  

I’ve received an assessment from HMRC

Our expert tax solicitors and barristers can assist you in submitting an appeal to HMRC or the Tribunal and entering into negotiations with HMRC by providing comprehensive legal advice and robust responses to the investigators. Our tailored team which also comprises of specialist forensic accountants can calculate what you owe and make representations on your behalf to HMRC.

Call us on 02071830529 or complete our online contact form.

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