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Disclosing historic cryptoasset tax liabilities

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Published: 01 Dec 2023 Update History

HMRC has launched a new service for taxpayers to voluntarily disclose any unpaid tax on cryptoassets, such as exchange tokens, non-fungible tokens, and utility tokens.

HMRC has recently sent emails to some taxpayers it believes have entered into cryptoasset transactions, but have not paid tax on those transactions.  

Transactions giving rise to capital gains relating to the 2022/23 or 2023/24 tax years should either be reported on self assessment returns for those tax years, or by using HMRC’s ‘real time’ capital gains tax service.   

Amounts relating to earlier years should be reported using the new disclosure facility. A guidance note published on 29 November confirms that users will need a government gateway user ID and password to access the facility. It also sets out the information they need to collate to submit a report. 

Taxpayers will need to establish for how many years they need to declare unpaid tax. This depends on whether they took reasonable care in the past in calculating and reporting their liabilities, or whether they deliberately misled HMRC about their cryptoasset income or gains. In theory the disclosure could cover up to 20 years, although Bitcoin (the first cryptocurrency) wasn’t created until 2008. Anyone unsure about making a disclosure should seek specialist advice. 

A separate guidance note has also been published advising how to pay tax on cryptoassets. 

The launch of this disclosure facility follows the announcement that the UK will join the cryptoasset reporting framework (CARF). The CARF is an OECD transparency standard agreed between multiple jurisdictions in March 2023, which will allow the automatic exchange of information on crypto exchanges between financial authorities including the details of taxpayers that use crypto exchanges. 

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