HMRC has begun sending ‘nudge letters’ to investors it suspects of failing to pay the correct tax on their gains from selling crypto assets, with further letters to follow in September, according to accountancy firm BDO.
The ‘One to Many’ letter from HMRC warns recipients that if an assessment concludes that there is additional capital gains tax (CGT) or income tax to pay on previously undisclosed crypto gains, there may also be interest due on any late payments as well as penalties to pay.
BDO said this letter is targeted at those the tax man knows have disposed of crypto assets without paying the required tax.
See also: How to adjust to the new normal for interest rates
Several years of unpaid tax may be payable and, depending on the reason why it is undisclosed so far, HMRC can have up to 20 years to assess additional tax.
Paul Falvey, a tax partner at BDO said: “Many owners of crypto assets may not be fully aware of their obligations and may not have filed a tax return before. They could well get a shock when this letter hits the doormat – but the worst thing they could do is to ignore it.
“To bring their tax position up to date, individuals may need to source reports from their financial advisers or online platforms. In certain circumstances, those affected would do well to seek specialist advice on the most appropriate disclosure facility to use
“If additional tax is due then HMRC could charge late payment interest and impose tax-geared penalties. These penalties can be up to 100% of the tax due – or more if the holding was based offshore.”
See also: Titan and Tavistock heading for legal battle as multi-asset partnership implode
