Cryptocurrency exchange Coinbase UK will disclose customer data to the HMRC (or Her Majesty’s Revenue and Customs) which is the UK’s tax authority, in response to the British tax authority’s legal notice, according to a crypto tax alert published on twitter.
???? UK Crypto Twitter:
Coinbase is providing information about your accounts to the HMRC.
This was sent to UK Coinbase users today who received more than £5,000 worth of crypto during the 2019/20 tax year. This includes purchases or deposits. pic.twitter.com/pnJsElnmjt
— TokenTax (@TokenTax) October 2, 2020
In an email, which was sent to its UK users, Coinbase informed its customers that it would pass over details to the HMRC of only those users who received more than £5,000 ($6,464) in cryptocurrency between 2019-2020. The crypto exchange said in the email that the HMRC originally asked the exchange to “provide certain records (of its UK based users) between 2017 and 2019.” But the exchange was able to work with the UK tax authority to revise the notice and reduce its scope. Now, the exchange is required to disclose the details of only those Coinbase UK customers that met certain minimum requirements.
A report found that last year, HMRC had sent letters to several other crypto exchanges in the UK that asked the entities to disclose their customers’ information who used crypto to move money between 2017 and 2019. The UK tax authority’s request for information could be used to check if UK citizens were accurately reporting their own taxes and charge those who were avoiding taxes.
So far, UK citizens who use cryptocurrencies pay capital gains tax if the value of the cryptocurrency increases above the minimum threshold. The HMRC “does not consider cryptoassets” such as “exchange tokens, utility tokens and security tokens to be currency or money.”
In fact, in terms of crypto taxes, HMRC earlier stated that it would “look at the facts of each case” and apply the relevant tax provisions accordingly. It further stated that HRMC’s views on crypto taxes would “evolve” as the cryptocurrency sector continued to develop.