British tax authority, Her Majesty’s Revenue and Customs (HMRC) have asked for Coinbase customer data in the U.K., who received over $6,470 in cryptocurrency in the 2018-2019 tax year.
The U.S. based crypto exchange firm, however, informed customers in the U.K. that they would be giving their information to the authority. According to Coinbase, they had to discuss terms for giving users data out with the authorities. The move is viewed as one by authorities to clamp down on the crypto firm through tax.
The HMRC intends to catch crypto users hiding their income from them and after those who received over $6,470 from 2017-2019. Coinbase managed to negotiate terms down and reduce the scope to 2018-19.
An email was sent by the exchange to customers informing them that their data would be released.
Coinbase warns customers over tax commitments
It should be noted that cryptocurrencies in the U.K. are viewed as an investment asset and are to be taxed. High-income earners could pay as much as 20 percent on gains.
In light of this, the U.S. exchange sent a warning email to customers who have crossed the $6,470 mark, encouraging them to meet their tax advisers.
HMRC request for Coinbase customer data has been made over a year ago. The Tax body demanded Coinbase customer data for U.K. residents who had moved money on their platforms.
Apart from Coinbase, eToro U.K. and CEX.IO were also asked to send information on their customer data.
Why HMRC requires Coinbase customer data
Although the main reason HMRC made this call cannot be ascertained, however, it can be said to be an action against crypto or simply revenue generation for the government.
HMRC spokesperson confirmed that the reason for Coinbase’s customer data is to help people get their tax affairs right.
The spokesperson mentioned that the HMRC usually gather data from various sources to improve the the integrity of the tax system and to identify those that have failed to declare their gains.
Authorities in the U.K are aware of tax avoidance becoming rampant in the crypto space. They are making up to not lose out on revenue generation in the future.