Her Majesty’s Revenue and Customs (HMRC) Does Not Consider All Crypto As Money
On Friday, November 1st, the United Kingdom’s taxation agency, Her Majesty’s Revenue and Customs (HMRC), allegedly updated their taxation guidance for businesses and individuals reports Coin Telegraph.
As it turns out the UK deems companies that take part in any cryptocurrency-related activities, including tokens either in exchange for other assets or providing services in return for tokens are all subject to several types of taxes. Some of these include Income tax, Corporation Tax, Capital Gains Tax, Stamp Taxes and the National Insurance Contributions.
The aforementioned also applies to individuals who take part in mining activity, in which said activities are automatically considered as “business activity”. In this case, the agency will consider several factors including degree of activity, organization and commerciality among others notes the news outlet.
This is what the HMRC was referenced sharing:
“HMRC expects individuals to buy and sell crypto assets with such frequency, level of organization and sophistication that the activity amounts to a financial trade in itself.”
Anything outside the aforementioned description is not deemed a cryptocurrency (i.e. stocks and securities), hence they cannot be viewed as either money or currency.
In the past, the agency had a negative viewpoint of cryptocurrencies, namely comparing it to gambling, but since the release of their recent taxation guidance, it is clear that they’ve had a change of heart.
Given that cryptocurrencies typically lead to tax evasion, HMRC has supposedly requested records of individuals with accounts at crypto exchanges. That said, they might be looking at recent investors since the past two to three years. While the reason as to why they are not planning to dig further back remains unveiled, this could potentially save earlier investors (if they haven’t claimed anything).