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HMRC Investigating Crypto-to-Crypto Transactions for Unpaid Tax

  • Writer: Daniel Cattrall
    Daniel Cattrall
  • 7 days ago
  • 2 min read

Updated: 12 hours ago

HMRC is ramping up investigations into crypto-to-crypto transactions, targeting individuals who may have misunderstood or underreported their tax obligations when exchanging one cryptocurrency for another. Many assumed these swaps were tax-neutral — but HMRC considers them taxable disposals, and is now using exchange data and blockchain analysis to identify discrepancies.


Tax Dispute Experts can support you in bringing crypto tax matters to a fair and swift resolution — whether you’ve already received an enquiry letter or are concerned that past activity may expose you to investigation.


Why Crypto Swaps Are Taxable

Under HMRC rules, exchanging one cryptoasset for another (e.g. trading Bitcoin for Ethereum) counts as a disposal for Capital Gains Tax (CGT) purposes — even though no fiat currency is involved.


Each transaction must be calculated using the GBP value at the time of the swap. If you made a gain on that disposal, it needs to be reported on your tax return.


Many individuals and even some accountants have historically missed this point, leading to:


  • Underreported capital gains

  • Incomplete records and tax returns

  • Misuse of pooling rules or base cost allocations


HMRC now considers this a widespread area of non-compliance.


What Should You Do If You're Affected?

If you’ve made crypto-to-crypto trades in the past and didn’t report them:


  • Don’t assume you’re safe just because no cash was withdrawn — these are still disposals.

  • Gather your trading records, including exchange reports, wallet transactions, and timestamps.

  • Avoid speaking to HMRC directly without advice — early engagement can increase risk if mishandled.

  • Seek advice from a specialist with experience in crypto tax enquiries and disclosures.


The sooner you act, the better your chances of reducing penalties and reaching a swift resolution.


Why HMRC Is Targeting This Area

HMRC sees crypto-to-crypto swaps as a key source of undeclared tax for several reasons:


  • Many investors were unaware they needed to report non-fiat trades.

  • Exchange activity spiked during bull markets (2020–2022), creating large unreported gains.

  • HMRC has begun receiving user data directly from exchanges like Coinbase, Binance and Kraken.

  • Blockchain analytics tools are making it easier for HMRC to trace wallet activity.


In short, what once felt invisible is now very much on HMRC’s radar.


How Tax Dispute Experts Can Help

We offer a structured, practical approach to resolving crypto tax investigations:


  • We’ll carry out a comprehensive review of your position, including a technical review of your trading activity and tax filings, so we fully understand the issues and risks you’re facing.

  • If you already have an adviser, we’ll collaborate with them to create a strategy that minimises your exposure to unnecessary tax, interest and penalties.

  • Where a disclosure is required, we’ll prepare and present it to HMRC, making sure it is accurate, robust and that you're treated fairly and proportionately.

  • We aim to fast-track your enquiry to resolution, helping you close all issues with minimum cost, stress, or disruption to your wider finances.




 
 
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