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HMRC's Letter to Taxpayers on Cryptoasset Disposals
Overview
HMRC’s Wealthy Team is sending "One to Many" letters to taxpayers believed to have disposed of cryptoassets without declaring the resulting chargeable gains or income. If you’ve received this letter, you must act within the given timeframe, and we recommend seeking specialist advice before responding.
Why Have You Received This Letter?
The letter will state "We’re writing to you as our records show you have disposed of cryptoassets. However, you haven’t declared everything correctly. This means you may have tax to pay."
This indicates that HMRC believes you have made transactions involving cryptoassets—such as selling, exchanging, or using them—that have not been properly reported for tax purposes.
Key Points from the HMRC Crypto Letter
Cryptoasset Disposal
Selling Cryptoassets for Fiat Currency: Taxable gains, even if funds remain on the crypto exchange.
Exchanging Cryptoassets: Taxable gains on transactions like trading Bitcoin for Ether or buying NFTs with Bitcoin.
Using Cryptoassets for Purchases: Tax implications similar to other assets.
Gifting Cryptoassets: Treated as received pound sterling value, taxable unless given to a spouse or civil partner.
Reporting Requirements
Disposals: Report and pay Capital Gains Tax (CGT) on any gains.
Income: Income Tax and National Insurance contributions may apply to income from activities like lending, staking, and mining, or from employment paid in cryptoassets.
Actions Required
You will need to disclose any income or gains related to your cryptoassets. This can be done by amending your Self Assessment return if you are within the time limit for the relevant year. If you need to report any unpaid tax on cryptoassets from previous years, use HMRC’s Cryptoassets Disclosure Facility. If you believe you have no cryptoasset-related tax to pay, you will need to prove this to HMRC.
Seek professional advice
Attempting to handle the situation on your own without the guidance of a tax expert can be risky and potentially detrimental. Responding without professional advice may inadvertently worsen your situation, leading to higher tax liabilities, additional interest, and severe penalties. Tax laws and HMRC procedures are complex, and even a well-intentioned response can contain errors or omissions that could be costly.
How We Can Help
If you have received a letter from HMRC regarding your cryptoasset transactions, Tax Dispute Experts can assist you. Our specialists will:
Conduct a thorough review of your tax affairs.
Identify any issues and determine the period to be disclosed via HMRC’s Cryptoasset Disclosure Facility.
Provide an initial assessment of your exposure.
Guide you through the disclosure process.
By working closely with you, we offer personalised support and handle all HMRC communications, ensuring your case is managed with precision.
Contact Us
Need assistance with an HMRC enquiry? Contact us today to speak with our Tax Dispute Experts and protect your interests.