HMRC Cryptoasset Campaign

Important Tax Update for Crypto Investors: What You Need to Know

As Chartered Tax Advisers with a wealth of knowledge dealing with cryptocurrency, we want to draw your attention to a crucial update from HMRC regarding cryptocurrency investments. The tax authority is intensifying its efforts to ensure all crypto-related taxable gains are properly declared and are running an HMRC Cryptoassset Campaign. Here is what you need to know about how to navigate this situation.

HMRC’s Increased Scrutiny

HMRC’s wealth compliance team is actively reaching out to individuals who have either sold cryptoassets or received payments in crypto but have not reported these transactions. This is being done through a series of “One to Many” letters. These letters are designed to prompt a response from those who may have overlooked their tax obligations related to cryptocurrencies.

Immediate Action Required

If you receive one of these letters, it is essential to not ignore it. HMRC requires a response within 60 days of receiving the letter. Ignoring the letter or disposing of it could lead to further complications. For those who need to discuss their crypto transactions, amendments, or disclosures, HMRC has provided a dedicated phone line: 03000 552294, available Monday to Friday from 9 am to 4:30 pm.

Contacting HMRC

There is also an email option for correspondence at [email protected]. However, it is highly recommended to consult with a tax professional before reaching out to HMRC via email. A factsheet titled Corresponding with HMRC by email is available, that should be reviewed before any email communication.

Why This Matters

HMRC views cryptocurrency as a high-risk area due to widespread confusion about tax liabilities. Their communication indicates that if you have disposed of cryptoassets, there is a possibility of unpaid tax. The language in the letter is direct, highlighting that HMRC is aware of your crypto transactions and expects full disclosure.

Steps to Take

If You Believe You Owe Tax: Seek advice from a professional before following the instructions in the letter. A qualified Tax Adviser or Accountant will contact HMRC on your behalf. This can potentially save you time, money, and stress in the long run. Your adviser will work with HMRC and share relevant details of your crypto transactions and the reasons for any tax owed.
If You Disagree With HMRC’s Assessment: Work with your adviser to provide supporting information that demonstrates why you do not owe tax on your crypto activities.
For Unpaid Tax From Previous Years: The letter will direct you to the cryptoassets disclosure service for declaring any unpaid tax from earlier tax years. Your adviser will help you complete a digital disclosure to bring your tax affairs up to date.

Professional Advice

Given the complexity of crypto tax, we strongly recommend seeking professional advice if you are unsure about your situation. If HMRC is aware of your tax adviser, they will send a copy of the letter to them. If you do not currently have a tax adviser, now is a good time to consider engaging one to ensure compliance and avoid potential issues.

Anyone can call themselves a tax adviser, tax accountant, or a tax agent. This does not mean they have the qualifications to support their claim.

When looking for a professional to support you, check that they hold a Chartered Tax Adviser or Chartered Accountant Qualification. This will ensure you get the right advice and representation when dealing with HMRC enquiries.

Key Resources

Assistance

Please feel free to contact us if you need assistance navigating this process or have any questions about your tax obligations related to cryptoassets, a member of our team will be happy to help. Ensuring timely and accurate reporting will help you avoid penalties and stay compliant with HMRC regulations.