If you’ve recently received a letter from HMRC regarding your cryptocurrency activities, you are not alone. HMRC has ramped up its efforts to ensure that individuals and businesses pay the correct amount of crypto tax. These so-called “nudge letters” are designed to prompt you to review your crypto transactions and make any necessary disclosures.
The clock is ticking—you only have 60 days to respond, and ignoring the letter could lead to additional penalties and interest on late payments should it be determined that you have underdeclared your previous taxable activity.
Why Have I Received This Letter?
HMRC’s nudge letters are targeted at individuals and businesses who they think may have failed to pay the correct tax on cryptocurrency transactions in earlier tax years. This includes anyone who has sold, exchanged, or used crypto.
HMRC now have access to a lot of data from crypto exchanges, the blockchain and other sources which they can use to identify UK taxpayers who may have made large crypto transactions but haven’t reported them for tax purposes. Data collection from HMRC is also increasing and information on crypto activity will soon be automatically shared under the new Crypto Asset Reporting Framework.
Why You Shouldn’t Ignore This Letter
The letter states bluntly that HMRC believes you may have undeclared crypto tax liabilities. If this sounds alarming, that’s because it is. The letter gives you 60 days to respond, either by acknowledging that you have no tax to pay (and providing evidence to support this) or by taking steps to disclose any unpaid taxes.
If you’ve received one of these letters, it’s crucial not to ignore it. Failing to respond could lead to serious consequences, including additional penalties and interest charges.
Why Professional Support Is Essential
Crypto taxation is a complex area, and HMRC acknowledges this in their communication. It is strongly recommended that you seek advice from a tax advisor with crypto specific expertise before making any communication back to HMRC, and that you respond within the required 60-day deadline.
Professional advice such as from Plus Accounting can help you review your transactions, calculate any potential tax liabilities, and communicate effectively and in the required time frame with HMRC. This help from a professional is essential to help you minimise any penalties and ensure you’re fully compliant with tax regulations.
Take Action Today
Contact us today to discuss your situation and get the professional advice you need to respond to HMRC in the right way.
Don’t let this letter become a bigger problem—take action now to protect yourself.
Author: Mason King, Senior Corporate Tax Manager
Any views or opinions represented in this blog are personal, belong solely to the blog owner, and do not represent those of Plus Accounting. All content provided on this blog is for informational purposes only. The owner of this blog makes no representations as to the accuracy or completeness of any information on this site or found by following any link on this site. Please note that AI has been utilised in generating content for this blog.
Date published: 22 August 2024