Taxpayers wanting to voluntarily disclose any unpaid tax on cryptoassets can now do so via a new service from HMRC.
The tax authority has contacted taxpayers it believes have entered into cryptoasset transactions but have not paid tax on those transactions.
Transactions giving rise to capital gains undertaken before the 2022/23 tax year should be reported using the new disclosure facility. HMRC has confirmed that users of the new service will need a government gateway user ID and password to access it.
In a guidance note, HMRC said 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.
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.
