Tax Agency in the UK Demands Customer Trading Data From Crypto Exchanges

The UK HM Revenue and Customs agency has contacted several locally registered cryptocurrency exchanges and demanded they provide information on customer transaction histories in order to determine the maximum taxable amount.

As it’s already known the UK tax agency has the authority to request the information from these exchanges based on the regulatory environment of the country. However, many traders have already voiced their discontent with the situation, citing that the Revenue and Customs agency is not the regulator, and therefore does not have the jurisdiction to request this type of data.

However, it’s important to note that the tax agency is in direct conjunction with the Financial Conduct Authority (FCA) and therefore has the authority to request this information. HMRC claims that such requests are within the scope of its competence:

“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.”

Reportedly, the firms affected by the demand are Coinbase, CEX.IO and eToro.

Concerned third parties

Several third party companies that offer crypto payments and transactions are now anxious if they will also be required to provide customer crypto transaction histories. As such, a representative of Playamo, Amelia FORESTER has commented that:

“We have a lot of crypto transactions coming in from our Australia branch which we then diversify on our UK customer accounts. We don’t have a dedicated record system as most of the transactions happen through our Aussie casino welcome bonus features. Therefore if the HM Revenue and Customs were to approach us and demand transaction history, we’d have a hard time coming up with the data.”

Same concerns have been voiced by representatives from UK-based crypto lending and investment firms, saying that they don’t have a dedicated platform for recording these transactions for the sake of reporting them to the government. The state of the reporting departments in these companies could be the reason why FCA was forced to come out with crypto regulation guidelines this month.

The actions of HMRC’s are significantly repeating those by the United States IRS, when it recently sent letters to 10,000 crypto investors, asking some to amend their tax filings, while compelling others to pay back taxes and/or interest and penalties. It all goes in light of FATF decision on crypto regulations, so such active pressure on the crypto market couldn’t go unnoticed. Nevertheless, despite the pressure, crypto market is still holding its ground.

Image courtesy of Live Coin Watch