HMRC is challenging those it suspects of failing to report their cryptoasset income and gains correctly. Our experts can help you correct your tax affairs using HMRC’s brand new disclosure facility.

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The crypto market has proven to be extremely lucrative for those with the right strategy. Many investors have made considerable sums and HMRC is on a campaign to recover any unpaid tax from successful investors and traders.

In November 2023, HMRC launched a new disclosure facility for those with irregularities in their tax affairs arising from cryptoasset transactions. The facility offers favourable settlement terms and we are recommending affected clients to take full advantage.

The introduction of this new disclosure facility signals a proactive approach by HMRC towards a wider crackdown on cryptoassets. Within the same month the UK government announced their commitment to a new international framework (the Crypto Asset Reporting Framework (CARF)) in which information regarding cryptoassets will be automatically shared to HMRC across borders. This is in addition to the sharing of information direct from crypto platforms and exchanges. As of January 2024, HMRC has sent over 8,000 nudge letters to individuals who they suspect owe tax on their cryptoassets. There has therefore never been a better time to review your position.

How can we help?

Our experts recognise that receiving a nudge letter from HMRC can be intimidating.

We will conduct a thorough review of your position, helping you to decide whether a disclosure is necessary. We will then submit an appropriate response to HMRC, tailored to your specific needs, ensuring your case is resolved without you paying any unnecessary tax, interest or penalties.

We have extensive experience dealing with cryptoasset disclosures on behalf of clients and regardless of whether you have received a nudge letter from HMRC or are looking to come forward voluntarily, our experts are on-hand to navigate this process with you.

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Do I need to make a disclosure?

Crypto sales are generally reportable on self-assessment tax returns. However, not all crypto sales will be subject to tax. Individuals have a capital gains tax annual allowance meaning that no capital gains tax is due if gains are below the annual allowance. However, all capital transactions are reportable (even if no tax is due) if the total sales proceeds for the year exceeds four time the annual allowance.

If you are in any doubt as to whether a disclosure is required, speak to a tax disputes specialist. The consequences of not making a disclosure when you should, could be stark. Consequently, we strongly recommend making a disclosure if you need to, and engaging the services of a specialist to ensure your disclosure is accurate, without paying any unnecessary tax, penalties or interest.

Why should I make a disclosure?

If you come forward and make a voluntarily disclosure, HMRC will not need to open a formal investigation. This means that you are in full control of the process and will be able to calculate what you owe to HMRC, without HMRC asking intrusive questions and demanding large volumes of information and documents.

Furthermore, by making a voluntary disclosure, you will almost certainly end up paying less money to HMRC. Whenever irregularities are present in a person’s tax affairs, HMRC is obliged to consider charging financial penalties. The penalties HMRC charges are determined by whether you came forward voluntarily, the reasons why your tax affairs were incorrect, and the quality of your eventual disclosure. By coming forward voluntarily, not only will you get an immediate ‘head-start’ on the penalty position, you can submit robust representations to mitigate your penalty exposure.

HMRC’s new disclosure facility allows you to self-assess your own penalty and in some cases, it will be possible to persuade HMRC that no penalty is due. Where you do not make a disclosure and HMRC has to open an investigation, it is extremely likely that HMRC will charge a higher penalty.

What if my tax affairs are in order?

Where your tax returns are accurate, no disclosure is required. However, if HMRC has sent you a nudge letter, it means it suspects there is additional tax for you to pay. If you do nothing, it is likely that HMRC will open an investigation and pursue the matter until it is satisfied the correct tax has been paid. To avoid the intrusion of an HMRC investigation, it may be wise to write to HMRC, explaining why no further tax is due. Every individual’s case will be different and our experts can help you to make the right decision for your circumstances.

How can Grant Thornton help?

The taxation of cryptoassets is notoriously complex. Some individuals will need to disclose that they owe income tax, whereas others will need to disclose that they owe capital gains tax. Some taxpayers may even need to disclose both. Our specialists are experts in cryptoasset disclosures and in recent years, we have prepared accurate disclosures on behalf of hundreds of clients.

Our expertise and experience means we are able to calculate your tax liabilities quickly, accurately and cost-effectively. While HMRC’s newly launched disclosure facility only opened in November 2023, it is very similar to other HMRC disclosure facilities that we have used extensively. We are experts in utilizing disclosure facilities of this nature to secure outstanding results for our clients, maximizing the full extent of any relief they are entitled to.

We also offer an entirely free, no obligation initial consultation. To speak with one of our experts today, please complete the ‘contact us’ form or dial the contact number at the top of this page.