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HMRC’s cryptocurrency tax treatment introduced without law

HMRC’s guidance on the tax treatment of cryptocurrency comes without any legislation underpinning it, says Nimesh Shah.

It’s disappointing that the Government have not produced legislation for this complex area and have left it to HM Revenue & Customs (HMRC) to decide how cryptocurrency transactions should be treated.

Cryptocurrency is not a new area and the Government must act to produce clear and defined law so that there is no ambiguity for taxpayers on how profits and losses should be assessed.

Last week’s ‘Tax Day’ was a missed opportunity for the Government to publish a consultation on the taxation of cryptocurrency. After all, the message of Tax Day was to start a journey on modernising the tax system, yet we do not have legislation on the growing cryptocurrency market.

The guidance published today in HMRC’s manuals follows several piecemeal releases in 2018 and 2019. It is extensive and detailed and is a significant step forward to previous versions.

While HMRC’s guidance is an improvement to provide further clarity in this area, which is becoming a more common investment and activity, it’s important to remember that this merely represents HMRC’s interpretation and is not law.

Would you like to know more?

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