HMRC is calling on crypto investors to come forward and pay any tax they owe as part of a campaign to crack down on tax avoidance.
The campaign, which launched yesterday (November 29), aims to tackle crypto tax avoidance and HMRC is encouraging people to come forward and disclose any unpaid tax.
This includes crypto assets such as exchange tokens, NFTs and utility tokens.
For the first time, the government body has launched a specific disclosure process for those with cryptoassets.
It is the latest move from the HMRC in the face of concerns that people with cryptoassets may not be aware of the tax implications of their investments.
HMRC sees profits or losses made on buying and selling of exchange tokens as subject to capital gains tax.
Its guidance says that only in exceptional circumstances will HMRC accept that buying and selling of crypto amounts to a trade for tax purposes.
Those who have sold crypto from a profit should consider whether they need to file a tax return.
Dawn Register, head of tax dispute resolution at accountancy and business advisory firm BDO, said: “The launch of this new disclosure facility highlights HMRC’s concern about non-compliance among crypto asset owners and underlines its determination to recover unpaid tax.
“As ownership of crypto assets tends to be concentrated among young adults, much of this non-compliance may stem from people simply not knowing or understanding their tax obligations when it comes to crypto. This facility could therefore be a very useful opportunity to rectify past mistakes.
“Individuals will need to get reports from their financial advisers or online platforms to understand their tax position. In certain circumstances, those affected would do well to seek specialist advice on the most appropriate disclosure facility to use.”
HMRC will soon start to receive information automatically about individuals’ trading activities.
Earlier this month, HMRC agreed a historic joint statement with 48 countries to help combat criminals using crypto-assets to evade and avoid billions in missing tax.
The Crypto-Asset Reporting Framework, spearheaded by the UK, will mean crypto platforms will need to start sharing taxpayer information with tax authorities, which is not currently the case. It is expected to take effect from 2027.
Victoria Atkins, financial secretary to the Treasury, said: “I am proud that the UK is once again demonstrating leadership on tackling global tax evasion, helping to secure the revenue that’s essential for the public services we all use.
“Today we are sending out a strong message that we will not allow criminals to use crypto to avoid paying their fair share.”
tara.o'connor@ft.com
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