HMRC: Crypto exchanges not eligible for tax returns

Sun 28 Nov 2021 ▪ 20h07 ▪ 3 min read — by Hugh Renolds

The rapid growth of cryptocurrencies made the whole world pay close attention to this type of asset, and worldwide regulators were no exception. Many of them rushed to impose new rules and submit various bills to regulate the industry, Cityam reports.

The UK Taxes Cryptocurrencies

Of course, Great Britain could not stand idly by. Last year, the UK began to work on new sets of rules concerning all kinds of digital services. In particular, Her Majesty’s Office of Revenue and Customs (HMRC) decided to introduce a special tax on digital services, originally intended to get various tech giants like Google, Facebook and Amazon to contribute more money to the government coffers.

The tax applies to any online platform, including search engines, social media, and marketplaces, with a revenue of more than £500m, £25m of which is meant to go to the UK.

And, with the growth of the cryptocurrency market, digital assets have also come under this tax. According to the latest statements from HMRC, even a simple Bitcoin exchange will not be exempt from it.

However, apart from this statement, HMRC also claimed that cryptocurrencies were not financial instruments. That, in turn, means that the rules applying to them are completely different from those of other types of assets. Moreover, HMRC noted that cryptocurrency exchanges are not eligible to claim tax returns on them.

Crypto exchanges of violating rules by HMRC

Naturally, crypto exchanges so far have followed completely different directions, and digital assets have been viewed by crypto investors as precisely that — financial instruments. That has led to multiple violations of the rules set by HMRC. In this regard, HMRC has filed accusations against cryptocurrency exchanges operating in the UK.

For many crypto platforms, such news comes as a big surprise, since most of them were sure they were doing everything right. Therefore, they will now have to quickly adapt to the new rules. However, not all of them may cope with this task. In addition, at the moment, it’s not yet known whether crypto exchanges will be subject to fines for the already committed violations.

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Hugh Renolds

I believe in the bright future of crypto. I have been investing since 2017 and look to share my experience in, and thoughts on, crypto and the blockchain.

DISCLAIMER

The views, thoughts, and opinions expressed in this article belong solely to the author, and should not be taken as investment advice. Do your own research before taking any investment decisions.

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