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HMRC pursues outstanding tax obligations related to historical crypto-assets

Navigating the taxation of crypto-assets can be intricate, requiring the declaration of various transaction types. HM Revenue & Customs (HMRC) mandates disclosure, especially for exchange tokens like Bitcoin, non-fungible tokens, and utility tokens. In efforts to enforce compliance, HMRC has sent emails to identified taxpayers engaged in crypto-asset transactions without fulfilling their tax obligations.

Strict guidelines accompany voluntary disclosure, emphasizing full payment within 30 days. Failure to meet this deadline prompts HMRC to take corrective measures, potentially resulting in penalties or interest. Taxpayers must determine the duration for which they need to disclose unpaid tax, considering their past diligence or potential deliberate misinformation about crypto-asset income or gains. The disclosure could theoretically span up to 20 years, although Bitcoin, the first cryptocurrency, emerged in 2008.

Transactions generating capital gains in the 2022/23 or 2023/24 tax years are exempt from the new system but can be reported through self-assessment returns or HMRC's real-time capital gains tax portal. Conversely, amounts from earlier years (up to three years back) should utilize the new facility.

The Association of Taxation Technicians (ATT) cautions that understanding crypto-assets' taxation complexities is crucial, advising taxpayers to seek guidance when uncertain about their tax responsibilities related to virtual assets or the reporting of income and capital gains to HMRC.

The introduction of the voluntary disclosure facility aligns with the UK's participation in the CARF international crypto-asset reporting framework, an OECD transparency standard adopted by various jurisdictions in March 2023. This framework facilitates the automatic exchange of information on crypto exchanges among financial authorities, including details of taxpayers utilizing crypto exchanges.


If you require assistance in relation to the above and/or would like to discuss anything further, please do not hesitate to contact or your usual A.C.T. contact.


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