A source to Coindesk is claiming that Britain’s tax authority, HM Revenue & Customs, has sent letters to three cryptocurrency exchanges requesting access to the trading records of British customers served by the platforms.
According to the source, Coinbase, eToro, and CEX.IO have all received the letters in the past week though none of the exchanges have confirmed the news.
Notably, the source claims that HM Revenue & Customs is only seeking records for the past few years, meaning very early (and likely most profitable) crypto trades will probably not be investigated (due to insufficient data).
“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 commented.
“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.”
HRMC would not provide particulars about what info it is seeking but did confirm that the information requests are within the agency’s purview, stating:
“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.”
In mid-July, the American Internal Revenue Service (IRS) sent thousands of “educational letters” to suspected cryptocurrency traders there whose names had been acquired “through various ongoing IRS compliance efforts.”
Regarding the letters, IRS Commissioner Chuck Rettig stated:
“Taxpayers should take these letters very seriously by reviewing their tax filings and when appropriate, amend past returns and pay back taxes, interest and penalties. The IRS is expanding our efforts involving virtual currency, including increased use of data analytics. We are focused on enforcing the law and helping taxpayers fully understand and meet their obligations.”
Information requests to crypto exchanges and wallet services are a regular occurrence.
According to a previous report, in 2017 Coinbase received a judgment by the US District Court of Northern California ordering it to hand over all account information to the IRS for any transaction with the equivalent of $20,000 or more during the years 2013 to 2015. In the case of United States v. Coinbase, the Court ordered the company to produce the following information: taxpayer ID; name; birth date; address; records of account activity; all periodic statements.