The tax authority of the United Kingdom, HM Revenue & Customs, has recently revealed that it is about to take data from exchanges in order to get unpaid taxes. Three major exchanges, CEX.IO, Coinbase, and eToro, received letters last week that demanded them to give information about their customers to the government.
According to reports, the government is looking at people who got hefty profits from the trading of cryptocurrencies in order to determine whether they paid their taxes or not. At the moment, however, people don’t know how far back the tax authority wants to go.
Information about the last two or three years can be considerably easy to find. However, information that goes back to the beginning of the decade might be unavailable today. This means that the largest token holders will not really be affected because they got hefty profits buying between 2012 and 2013 and most companies do not have accurate data for that time.
UK Is Following US In Collecting Crypto Taxes
This move from the U. K. tax authority is actually pretty similar to the move made by the U. S. Internal Revenue Service (IRS). The IRS is also chasing exchanges in order to determine whether the clients are actually paying their dues or not.
As crypto exchanges are generally required by law to gather information about their clients, they can provide a full database for the government.
Incomplete information, however, can become an obstacle. In the recent past, Coinbase has several users named as “John Doe” who used fake data in order to cloak their identities. More recently, however, exchanges are becoming more diligent in the Know Your Customer process.