Innovate UK grant winners Recap recently released a desktop application that simplifies tax positions for cryptocurrency investors. Recap brings transparency to cryptocurrency finances, while ensuring financial data is protected using end-to-end-encryption. This follows recent rumours of a HMRC crackdown on cryptocurrency tax.
UK based cryptocurrency startup Recap aims to take away the headache of working out your tax position based on money earned or lost when making cryptocurrency trades with cryptos such as Bitcoin and Ethereum amongst thousands of others; all whilst maintaining absolute privacy.
Co-founders Dan Howitt and Ben Shepheard have been involved in the cryptocurrency industry since 2013 and helped to define the UK’s regulatory position on cryptocurrencies. Now, the founders are solving a new problem.
Daniel Howitt, Recap’s CEO, explained how Recap was born: “I spent 38 hours calculating my tax liabilities for my cryptocurrency transactions. Even while using the existing platforms and a chartered accountant, it was unnecessarily difficult to calculate”.
After 18 months of development, an Innovate UK grant and a pre-seed fundraising round, Dan and Ben have released version 1.0 of Recap. CTO Ben Shepheard said “We are delighted to finally bring our solution to the market. There has been a lot of demand from users for the full release following the success of our private beta”.
The release comes as CoinDesk recently reported on an impending HMRC cryptocurrency tax crackdown – “HMRC said it was withholding details about its demands for information (from cryptocurrency exchanges) since disclosing them could jeopardize the assessment or collection of tax.”
Dan explained how the Recap desktop application works: “Users download our desktop application and link to the cryptocurrency exchanges and wallets that they use via read-only API connections. The platform automatically extracts the transaction data, historically prices transaction values and calculates the tax position for the user. All of this is done using end-to-end encryption (similar to WhatsApp and Telegram)”.
“The security and privacy focus of Recap is extremely important due to the permanent nature of cryptocurrency transactions. You often hear about high net worth cryptocurrency investors being forced into sending their cryptocurrency to a criminal’s wallet – an irreversible process. Therefore, the fewer people who are aware of your cryptocurrency activity, the safer you are. None of the current solutions offer this level of security and privacy” said Ben Shepheard.
Cryptocurrencies are capital assets in most tax jurisdictions. Therefore, all disposals are taxable events – even cryptocurrency to cryptocurrency transactions, such as exchanging Bitcoin for Ethereum. “30% of cryptocurrency users in the UK do not know that cryptocurrency to cryptocurrency transactions are taxable events. We have even seen cases where users have tax liabilities greater than their current portfolio values” Dan Howitt stated.
Recap won an Innovate UK grant for £135,000 in December 2018 and recently expanded their team from two to five employees, as well as moving offices from Sparkhouse to Think Tank. We asked the CEO Dan Howitt what was next for Recap: “We are currently expanding the number of exchanges that we fully support, starting with Coinbase Pro and Binance. We are also integrating US specific tax rules. We want our community to let us know what would be most useful to them, so if you want to help us out with that head to our twitter: @recap_io”.