The U.K. issued guidance clarifying the tax treatment of cryptocurrency businesses and certain record-keeping requirements for auditing purposes.
In guidance published Nov. 1, Her Majesty’s Revenue and Customs said crypto businesses will have to keep records of all trades they make in pounds sterling, even if the trade is between two different cyrptoassets.
- It clarified how crypto businesses will be subject to capital gains tax, corporate tax, income tax, national insurance contributions, stamp taxes, and the value-added tax.
- The guidance clarified at what point the tax office considers the buying and selling of exchange tokens as a trading activity. This depends on the degree and frequency of activity, level of organization and intent—in terms of calculated risk and commerciality, it said.
- HMRC also provided details on the types of information the tax office will require from traders for auditing purposes. For example, the office will require information of the valuation methodology and the amount spent on each type of exchange token for every trade.
- The government said cryptoassets must be calculated in accordance with generally accepted accounting practice.