After two relatively friendly reminder letters to cryptoasset holders, to make sure that their tax affairs are in order, HMRC have upped the ante with a third nudge letter that should leave the reader in no doubt that HMRC are serious about collecting tax due on crypto assets.

By Chris Davies

The first two letters were simply reminders to ensure that all crypto transactions had been declared or a reminder how to calculate the gains but the third is quite brutal…..

“…our records show you have disposed of cryptoassets. However, you haven’t declared everything correctly. This means you may have tax to pay.”

The nudge letters have no force of law and responding to them is entirely voluntary. If you believe that you have disclosed all of your gains, then in theory you need take no action. However, the contents of HMRC’s letter make it clear that it is not a course that they will expect you to take:

“If you’re satisfied that you don’t have any cryptoasset-related tax to pay, please contact us at the details provided further down in this letter. You will need to provide information as to why your cryptoasset activities have not led to any tax being due.”

The tone of the letter clearly indicates that if you do not reply then HMRC will open a formal enquiry and that can prove both stressful and expensive.

If you believe your disclosures to be complete and accurate then we would recommend that you reply to that effect to HMRC. However, if you believe that there might be a problem then either check your numbers again, or engage the services of a crypto specialist accountant to check your figures. Either way if anomalies are discovered then these can be disclosed using the Crypto Asset Disclosure Service

If you receive one of these letters and have concerns, do please reach out to one of our crypto tax specialists.