Tax Man Wants Software To Snoop On Crypto Trades

The British tax man is urging software developers to come up with an app that tracks cryptocurrency transactions to stop money laundering and tax avoidance.

HM Revenue & Customs has put the task up for tender and is inviting developers to bid up to £100,000 for the contract.

The tax authority wants software that improves free online resources for monitoring cryptocurrency trades.

The app should include tracking for a range of cryptocurrencies, including Bitcoin, Bitcoin Cash, Ethereum, Ethereum Classic, Tether, Ripple and Litecoin.

HMRC would also like to see the same capability included for Monero, Zcash and Dash.

Filling intelligence gap

The aim of the software, says HMRC, is to: “provide a means to transfer value between interacting parties. These services are increasingly used for a range of purposes, from international money transfers, sales of digital services, paying staff and tax evasion and money laundering.”

HMRC wants to fill ‘intelligence gaps’ in online resources to identify potential tax avoidance and money laundering.

The closing date for tenders is January 27, 2020.

HMRC has also demanded cryptocurrency exchanges should provide lists of customers and their crypto transactions for comparison with tax returns to make sure investors are declaring their profits correctly.

Meanwhile, HMRC has revealed just over 300,000 investigations into self-assessment tax returns filed in January 2019.

The inquiries raised £1.2 billion in extra tax.

Most of the investigations were triggered by mistakes on tax returns – with 31,500 penalties for deliberate errors.

Millions paid in penalties

Another 477,000 returns were filed after the deadline, leading to £47.7 million of penalties. Late filing attracts a £100 fine even if no tax is owed.

This year’s self-assessment filing deadline is midnight on January 31, 2020, and covers the tax year ending April 5, 2019.

Bridget Culverwell, director at tax and accountancy consultants Moore, said: “HMRC will be combing through tax returns looking for reasons to investigate you – so it’s crucial you don’t make basic mistakes.

“Tax investigations can be very stressful and even a basic investigation can drag on for months.

“If there are sudden increases in your costs or reductions in your income, that reduces your tax, then make sure you explain these to HMRC when you submit your return. That may help stop an inquiry being opened.”

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