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Exchange of information between tax authorities and Crypto platforms will lead to a more focussed approach from HMRC on unpaid Crypto taxes.

Back in March it was announced that, from 2024/25 onwards, there would be a new separate section within self-assessment tax returns for individuals and trusts, specifically for reporting cryptocurrency transactions. This change separates ‘crypto’ out from the current ‘other assets’ category and is anticipated to boost the Exchequer’s revenue by £30million within the first three tax years of operation.

More recently, HMRC have brought in a new disclosure facility for Crypto assets, giving taxpayers the opportunity to come forward and disclose undeclared Crypto income and gains for prior years. The new disclosure form has been specifically designed for Crypto (i.e. it doesn’t just use the existing disclosure facility).

It is possible that HMRC may introduce a deadline similar to the ‘Requirement to Correct’ regime that was previously used in relation to offshore income and gains, whereby lower penalties are charged if disclosure is made prior to the deadline, with harsher penalties coming into effect after a certain date.

HMRC are likely to have substantially better access to Crypto information by 2027, under the new Crypto-Asset Reporting Framework (CARF) which will require Crypto platforms to share taxpayer details with tax authorities, which currently they do not do. In turn, these tax authorities will exchange information with each other, enabling easier pursuit of non-compliance.

This could create a significant exposure for individuals who are unaware of their Crypto reporting requirements, should HMRC decide to take a ‘Requirement to Correct’ approach with penalties. This would not be surprising, given the current attitude towards non-disclosure of Crypto transactions.

The actual disclosure process under this new facility seems to be very similar to the existing Worldwide Disclosure Facility (WDF) and tax payments are due within 30 days of submitting the disclosure, with no need to ‘notify’ HMRC in advance. If you have any concerns or questions relating to the potential tax position of previous Crypto transactions, please get in touch with your usual TAP contact, complete the enquiry form on this page or contact us to arrange a chat with one of our colleagues.