HMRC is to begin collecting data on holdings of cryptocurrencies from taxpayers it suspects of tax evasion and avoidance.
With the recent surge in interest and value in cryptocurrencies, HMRC will ask for more stringent information in their ‘statement of assets’ which asks to account for all taxpayers assets and investigation. This information is looking for assets that could be used by organised crime.
The information asked for will include Bitcoin and Ethereum, PayPal, and assets in ‘value transfer’ systems such as Black Market Pesos which is used by Mexican and Colombian drug cartels, Hundi, used in India for credit-notes and Fei ch’ien, a Chinese money transfer system.
HMRC will prosecute if any assets are found in these channels as HMRC try to get to grips with problem.
HMRC views cryptocurrency as a digital currency and when it comes to taxation, HMRC treats it as an asset. This means that disposal of crypto is subject to capital gains tax.