Britain’s Tax Agency Cracking Down on Crypto Tax Evasion
Britain’s highest tax authority, Her Majesty’s Revenue & Customs (HMRC), has issued a request for blockchain analysis tools. The main goal, per the request, is to find and implement technology that allows the government to track and tax cryptocurrency users.
The problem facing the British government, as well as all governments, is that cryptocurrency transactions are more difficult to track compared to electronic fiat transactions. Without a simple tracking methodology, crypto users are often able to fly under the radar of normal tax reporting services. Therefore, HMRC is looking for “a tool that will support intelligence-gathering methods to identify and cluster cryptoasset transactions into linked transactions and identify those linked to cryptoasset service providers.”
Bitcoin (BTC) has proven somewhat simple to track, with wallet addresses being relatively easy to link to account holders. Other currencies, though, like Monero (XMR), Zcash (ZEC), and Dash (DASH), are more difficult to track due to their privacy-focused features.
As the tracking cryptocurrency transactions can be complex, and for a governmental agency to do so on a large scale requires sophisticated software, the tendered offer is for GBP 100,000 (USD 130,000).
HMRC says that the system should be delivered by February of 2020.
Last year, HMRC released a series of tax-related guidelines for individuals and in November said that firms will be obliged to declare cryptocurrency-related business actions on their company tax returns, and could be liable to pay multiple taxes on their crypto dealings.
Back then, HMRC also stressed that it does not “consider exchange tokens [Bitcoin and major altcoins] to be money.”
In the same month, the UK announced that cryptoassets are to be treated as property, bringing the legal treatment of tokens into line with public perception.
Meanwhile, other countries have also recently announced crypto taxing related news. As reported yesterday, the South Korean government is reviewing a proposal that could see it introduce a tax on cryptocurrencies, while new Russian Prime appears keen to see the government adopt a crypto tax law by spring 2020.
