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.
Your FAQs answered:
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.
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.
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.
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.