Responding to HMRC’s consultation on the inclusion of cryptoassets in the investment transactions list used for the purposes of the investment manager exemption, the CIOT suggests HMRC should adopt ‘a generally-accepted and universally-applied definition of cryptoassets for UK tax purposes’. Key points include:
The proposed definition, based on the OECD’s crypto-asset reporting framework definition is too wide for the purposes of the investment transactions list (ITL) and would need to incorporate exclusions, for example for transactions in land and ‘closed-loop’ assets.
Whatever definition is adopted, that definition should be set out in legislation and applied universally for all relevant taxes (not just for ITL purposes).
In its response, the Society of Trust and Estate Practitioners (STEP) highlights the different definitions of ‘cryptoasset’; for example, contrasting the definition in the UK principal money laundering regulations (MLRs) with the slightly wider OECD definition. Key response points include:
Incorporating a reference to ‘similar technology’ would help to future-proof the definition, ensuring it can accommodate new variations of cryptoassets.
The UK MLRs cover ‘a right to, or an interest in, the cryptoasset’. This could be an important practical point to include in the definition for tax purposes, where investment managers deal with cryptoassets held on trust rather than being held directly by their clients.
The definition of ‘cryptoasset’ needs to be precise, particularly in relation to transactions where nothing is actually transferred (for example, a non-fungible token), to bring clarity to whether various intangible assets are covered by the definition.
Responding to HMRC’s consultation on the inclusion of cryptoassets in the investment transactions list used for the purposes of the investment manager exemption, the CIOT suggests HMRC should adopt ‘a generally-accepted and universally-applied definition of cryptoassets for UK tax purposes’. Key points include:
The proposed definition, based on the OECD’s crypto-asset reporting framework definition is too wide for the purposes of the investment transactions list (ITL) and would need to incorporate exclusions, for example for transactions in land and ‘closed-loop’ assets.
Whatever definition is adopted, that definition should be set out in legislation and applied universally for all relevant taxes (not just for ITL purposes).
In its response, the Society of Trust and Estate Practitioners (STEP) highlights the different definitions of ‘cryptoasset’; for example, contrasting the definition in the UK principal money laundering regulations (MLRs) with the slightly wider OECD definition. Key response points include:
Incorporating a reference to ‘similar technology’ would help to future-proof the definition, ensuring it can accommodate new variations of cryptoassets.
The UK MLRs cover ‘a right to, or an interest in, the cryptoasset’. This could be an important practical point to include in the definition for tax purposes, where investment managers deal with cryptoassets held on trust rather than being held directly by their clients.
The definition of ‘cryptoasset’ needs to be precise, particularly in relation to transactions where nothing is actually transferred (for example, a non-fungible token), to bring clarity to whether various intangible assets are covered by the definition.
.tmb-editorspic.jpg?sfvrsn=df04ab27_1)
