Crypto Currency Thread (Vol.2)
Discussion
Going back to a topic discussed on here a while back.
In 2017 HMRC altered their cryptocurrency advice quite a bit, and essentially said to manage it like stocks/shares.
However anyone who was messing with a few hundred quid in the early days probably never expected to make significant capital gains, so probably never bothered to document their dealings.
Last year I made a few cryptocurrency capital gains that would have fit into my normal CGT allowance, but then I sold a CGT exposed property which obviously used up all my allowance (28pc on property), and meant I suddenly had to figure out my cryptocurrency gains in stock/shares detail... which given I'd brought some bitcoin fork coins back into my bitcoin holdings, some via other cryptocurrencies to be able to even get them, via random wallets and via random means (digging out the priv keys manually from the seed phrases), the whole lot has been a big stress.
Anyhow my accountant said it'd be worth calling HMRC to discuss the possibility of just declaring at 20pc rate, as if I'd bought at £0. In simple terms this just means you declare the gain at 20pc and that's that. Not so bad if you've made 20,000%+ return... you'd easily spend more calculating the correct gain, than you would save in tax.
I rang HMRC and the lady I spoke to put me on hold to speak to a specialist for 5 minutes. When she got back to me she said that declaring the gain as if from £0 was ok if documentation didn't exist, or was too complex to complete correctly.
She said this was increasingly common and many people were being advised to do this.
You could argue that documentation is present because it's all on the block-chain. However the prices aren't. Opening prices at forks are difficult to get. Back in 2015-16-17 exchange rates were all over the place.
Transaction costs thus are impossible to determine.
Arguably, you can't really accurately document your capital gains unless you literally took a documented record of each "event" when it occured.
Even HMRC are ambiguous on this, because they don't explicitly say how to deal with a fork. And there was no formal advice at the time of the big bitcoin forks on needing to even document the activity. HMRC advise that you just 'do it yourself' so there is ample room for tweaking the values to avoid gains here if you wished, based on what you did with these forked coins later. Ie, you could bundle a loss by apportioning a bigger amount of value to the fork that lost more value later.
So any way, I've decided that rather than spend a week doing all this work to save about £50 on capital gains tax, at most, and it still probably be +/- £50 in accuracy (because of the lee-way on fork events), I'm just going to declare the actual cash gains I made from crypto last year at 100% (ie, 20pc tax exposure), and add a note that there is insufficient documentation to do otherwise.
I note earlier commentators on this issue have said that doing so is knowingly declaring incorrect information on the tax return, and HMRC would see this as bad.
Clearly their advice now is that this is ok if the net effect is they get more money, and the documentation is insufficient to do otherwise.
Hopefully others are hearing the same advice if they've spoken to HMRC?
Cheers
In 2017 HMRC altered their cryptocurrency advice quite a bit, and essentially said to manage it like stocks/shares.
However anyone who was messing with a few hundred quid in the early days probably never expected to make significant capital gains, so probably never bothered to document their dealings.
Last year I made a few cryptocurrency capital gains that would have fit into my normal CGT allowance, but then I sold a CGT exposed property which obviously used up all my allowance (28pc on property), and meant I suddenly had to figure out my cryptocurrency gains in stock/shares detail... which given I'd brought some bitcoin fork coins back into my bitcoin holdings, some via other cryptocurrencies to be able to even get them, via random wallets and via random means (digging out the priv keys manually from the seed phrases), the whole lot has been a big stress.
Anyhow my accountant said it'd be worth calling HMRC to discuss the possibility of just declaring at 20pc rate, as if I'd bought at £0. In simple terms this just means you declare the gain at 20pc and that's that. Not so bad if you've made 20,000%+ return... you'd easily spend more calculating the correct gain, than you would save in tax.
I rang HMRC and the lady I spoke to put me on hold to speak to a specialist for 5 minutes. When she got back to me she said that declaring the gain as if from £0 was ok if documentation didn't exist, or was too complex to complete correctly.
She said this was increasingly common and many people were being advised to do this.
You could argue that documentation is present because it's all on the block-chain. However the prices aren't. Opening prices at forks are difficult to get. Back in 2015-16-17 exchange rates were all over the place.
Transaction costs thus are impossible to determine.
Arguably, you can't really accurately document your capital gains unless you literally took a documented record of each "event" when it occured.
Even HMRC are ambiguous on this, because they don't explicitly say how to deal with a fork. And there was no formal advice at the time of the big bitcoin forks on needing to even document the activity. HMRC advise that you just 'do it yourself' so there is ample room for tweaking the values to avoid gains here if you wished, based on what you did with these forked coins later. Ie, you could bundle a loss by apportioning a bigger amount of value to the fork that lost more value later.
So any way, I've decided that rather than spend a week doing all this work to save about £50 on capital gains tax, at most, and it still probably be +/- £50 in accuracy (because of the lee-way on fork events), I'm just going to declare the actual cash gains I made from crypto last year at 100% (ie, 20pc tax exposure), and add a note that there is insufficient documentation to do otherwise.
I note earlier commentators on this issue have said that doing so is knowingly declaring incorrect information on the tax return, and HMRC would see this as bad.
Clearly their advice now is that this is ok if the net effect is they get more money, and the documentation is insufficient to do otherwise.
Hopefully others are hearing the same advice if they've spoken to HMRC?
Cheers
Guvernator said:
So they have banned it but they can't actually stop you from accessing it as it's not a UK based exchange so what exactly does the ban achieve, I just logged into it 5 minutes ago?
US users are banned from it, and the same technology could be applied to UK users I presume. They've been trying to circumvent the US block, which has only increased interest from the IRS.
Mr Whippy said:
I'm just going to declare the actual cash gains I made from crypto last year at 100% (ie, 20pc tax exposure), and add a note that there is insufficient documentation to do otherwise.
Cheers
Thanks, useful post.Cheers
Presumably that's gains that have hit your UK Bank Account and not just 'paper' gains in the Crypto world ?
So theoretically, if you convert Crypto back to fiat and withdraw £100k over the tax year, you're declaring £20k as tax ?
Simpo Two said:
'The Financial Conduct Authority (FCA) has ruled that the firm cannot conduct any "regulated activity" in the UK' - which from the broadcast is futures, options and something else I can't remember.
We presume unregulated activity is OK
Yes, anyone can carry out unrelgulated activity. That's the point of making a product regulkated, it limits who is able to carry it out.We presume unregulated activity is OK
dimots said:
Yeah exactly, it's not banned. Unlikely your bank will be happy about you using it though.
The problem is UK banks will have to follow FCA regulations and will not be able to withdrawal from a banned exchange due to money laundering regs us what I think will happen after Weds.johnnyBv8 said:
I was also on Binance because I wanted to access coins not on some of the other platforms. I’ve moved my mainstream coins to Coinbase. I know it’s not the cheapest platform, but it’s far more user-friendly than Binance. I may move again as I still have some that I couldn’t move over, but it’ll do short term.
I got the most atrocious service from Coinbase and read a number of posts of people losing $150k+. So instead I've gone to Bitladon, and thus far it has been perfect. They even let you stake your holding as well.The Spruce Goose said:
dimots said:
Yeah exactly, it's not banned. Unlikely your bank will be happy about you using it though.
The problem is UK banks will have to follow FCA regulations and will not be able to withdrawal from a banned exchange due to money laundering regs us what I think will happen after Weds.You can always transfer via the BTC/ETH addresses to other exchanges?
The Spruce Goose said:
dimots said:
Yeah exactly, it's not banned. Unlikely your bank will be happy about you using it though.
The problem is UK banks will have to follow FCA regulations and will not be able to withdrawal from a banned exchange due to money laundering regs us what I think will happen after Weds.Mr_Megalomaniac said:
johnnyBv8 said:
I was also on Binance because I wanted to access coins not on some of the other platforms. I’ve moved my mainstream coins to Coinbase. I know it’s not the cheapest platform, but it’s far more user-friendly than Binance. I may move again as I still have some that I couldn’t move over, but it’ll do short term.
I got the most atrocious service from Coinbase and read a number of posts of people losing $150k+. So instead I've gone to Bitladon, and thus far it has been perfect. They even let you stake your holding as well.fourstardan said:
BBC need to be banned for spreading BS.
Its not binance banned, you can't have your hands cut off for using it...they don't recommend using Binance for derivatives (and neither do I)
FCA are chest beating, someone had an performance objective to meet and they've met it.....
I don’t think that you understand what banning something means in the UK. It doesn’t mean cutting people’s hands off.Its not binance banned, you can't have your hands cut off for using it...they don't recommend using Binance for derivatives (and neither do I)
FCA are chest beating, someone had an performance objective to meet and they've met it.....
Gassing Station | Finance | Top of Page | What's New | My Stuff