Introduction to Jack Ross Chartered Accountants
Since 1948, Jack Ross Chartered Accountants has provided state-of-the-art accounting services in Greater Manchester and beyond. We pride ourselves on our dedication to financial integrity and technological innovation. Whether you are a sole trader or a large corporation, our clients are our priority.
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Cryptocurrency is a type of digital or virtual currency that uses cryptography for security. Unlike traditional currencies issued by governments, cryptocurrencies operate on decentralised networks based on blockchain technology—a distributed ledger that records all transactions across a network of computers.
Popular Cryptocurrencies: Bitcoin and Ethereum
Popular examples include Bitcoin and Ethereum. Cryptocurrencies can be used for a variety of financial transactions, including buying goods and services, and have also become popular as investment assets.
Cryptocurrency and Taxation
Like almost all other sources of income, any capital gains made from cryptocurrency are taxed by HMRC. The rules around taxation for cryptocurrencies like Bitcoin and gains made from non-fungible tokens are complex. If you are in need of professional advice on any potential crypto-assets and your tax liabilities, use the contact form below and a member of our team will be in touch to discuss next steps.
HMRC’s New Disclosure Service
Disclosing Gains: Procedures and Timeframes
Any gains related to the current tax year (2023/24) or the previous tax year (2022/23) should be disclosed using the standard procedures (Self-Assessment tax returns or with HMRC’s ‘real time’ capital gains tax service). If the gains date to before the years 2023/24 or 2022/23, then you should inform HMRC using the new disclosure service.
HMRC has recently sent email correspondence to taxpayers it believes may have unpaid tax liabilities on crypto-asset gains. Taxpayers are required to determine the duration over which they must declare any unpaid tax. This decision is based upon their historical diligence in reporting liabilities or if they intentionally deceived HMRC regarding their crypto-asset earnings or gains. In some cases, this disclosure period could extend to two decades. Those uncertain about how to proceed with a disclosure are advised to consult with an expert like Jack Ross for guidance.
The CARF Framework
This service follows the recent decision by the UK to participate in the crypto-asset reporting framework (CARF). Agreed upon by numerous countries in March 2023, the CARF is a transparency standard set by the OECD. This framework enables the seamless sharing of data regarding crypto transactions among financial authorities.
Using the HMRC Portal
If you need to disclose historic gains on crypto-assets, you will need a Government Gateway ID and password to log into HMRC’s portal. If you do not have a Government Gateway ID, we have written a simple guide on how to set up your Government Gateway Account.
To determine the duration for declaring unpaid tax on cryptocurrency, consider your past tax reporting accuracy. If you’ve consistently reported liabilities correctly, your disclosure period may be shorter. However, if there’s any history of deliberate misinformation to HMRC regarding crypto gains, the period could extend up to 20 years.
Misleading HMRC about cryptoasset earnings can lead to significant legal and financial consequences. It may result in longer periods for tax declarations and potentially higher penalties. Honest and accurate reporting is crucial to avoid these complications.
Yes, seeking professional advice for cryptocurrency tax disclosure is highly recommended. Tax regulations for crypto assets can be complex, and expert guidance ensures you accurately declare earnings and understand your liabilities, reducing the risk of future issues with HMRC.