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How Will HMRC Even Know You Own Crypto?

Cryptocurrency markets are in constant flux, so you may be wondering how HMRC would ever know what your activities in the space have been in the first place.<br>

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How Will HMRC Even Know You Own Crypto?

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  1. How Will HMRC Even Know You Own Crypto?

  2. Cryptocurrency markets are in constant flux, so you may be wondering how HMRC would ever know what your activities in the space have been in the first place. HMRC stated a few years ago that they were collaborating with prominent crypto exchanges to share consumer data obtained from Know Your Customer records. They’re utilizing this information to send reminder letters to crypto investors, encouraging them to report bitcoin to HMRC, and to contact investors they feel are dodging HMRC cryptocurrency taxes.

  3. Defining Bitcoin And Cryptocurrency A cryptocurrency (or “crypto”) is a digital currency that may be used to purchase goods and services, but it is secured by an online ledger and powerful cryptography. The majority of activity in these unregulated currencies at the moment, however, is for profit trading, with speculators driving values to almost unbelievably stratospheric levels at times.

  4. According to CoinMarketCap.com, a market research website, more than 15,000 different cryptocurrencies are publicly traded. Cryptocurrencies are still on the rise. On December 10th, 2021, the total value of all cryptocurrencies was around 2.3 trillion dollars, down from an all-time high of $2.9 trillion just weeks before. The overall market value of bitcoins, the most widely used digital currency, was estimated to be around $932.4 billion. Which is what we mean by stratospheric.

  5. But what about your personal cryptocurrency exchange in the United Kingdom? Is Binance required to report to HMRC? What about HMRC and Coinbase? Which cryptocurrency exchanges are required to answer to HMRC? HMRC announced in 2019 that they have contacted cryptocurrency exchanges doing business in the UK, including Coinbase, eToro, and CEX, to collect user data. So far, they’ve just mentioned these three crypto exchanges.

  6. Before you breathe a sigh of relief, keep in mind that just because HMRC hasn’t mentioned your crypto exchange doesn’t mean they haven’t approached them. HMRC is clamping down on cryptocurrency, therefore it’s safe to presume they’ve contacted all of the big cryptocurrency exchanges operating in the UK, including Binance, Kraken, KuCoin, Gemini, CoinJar, Crypto.com, Bittrex, and Gate.io.

  7. What Pearl Lemon Accountants Can Offer As Your Bitcoin Accountant It’s not always easy to figure out how to pay tax on Bitcoin Accountant and other cryptocurrencies. To effectively compute the profit/gain and pay the lowest amount of tax legally possible, you’ll need the knowledge to comprehend the intricacy and unique nature of these transactions. And even if you know your crypto basics well, the complex UK tax regulations that are emerging around this still evolving form of investment can be mind-boggling (sometimes even to us at first!)

  8. Do I Really Have to Report Bitcoin on My Taxes? Don’t make the mistake of believing that your activities aren’t subject to HMRC scrutiny. We’ve seen far too many firms suffer as a result of inadequate tax preparation and financial penalties in our extensive experience. Bitcoin traders and cryptocurrency firms are no exception. Because HMRC is now actively investigating bitcoin activity, it’s more crucial than ever to maintain cryptocurrency tax compliance. In the United Kingdom, cryptocurrency trading is totally legal – as long as you report any earnings to HMRC, which means you’ll have to pay tax on them.

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