The UK tax collector has commenced a new voluntary disclosure process for those with unreported crypto gains. HM Revenue and Customs wants the public to report earnings from crypto exchange tokens, non-fungible tokens (NFTs), and utility tokens, following a recent move to clampdown on corporate tax evaders.
This disclosure follows an earlier program to disclose non-crypto taxes in the UK. The UK government previously estimated that between 55% and 95% of crypto holders may be violating tax laws.
Crypto Taxpayers Should Seek Advice
Some advisers say taxpayers should get advice before using the disclosure facility. They should get an expert opinion because of the complex nature of crypto taxes and the fact that several years’ worth may have been unpaid. For example, it may not be clear to crypto holders which crypto asset activities caused taxable gains.
Read more: How to Reduce Your Crypto Tax Liability: A Comprehensive Guide
Daniel Howitt, head of Recap, a crypto tax software vendor, said crypto investors could use this opportunity to understand their obligations before the tax authority can access better data. Richard Jones, a senior technical manager of policy at ICAEW, said the rapid progress of the asset class has seen regulators playing catch up.
Read more: The Ultimate US Crypto Tax Guide for 2023
Sunak Targets Crypto Evaders Despite Tax Cuts
British Prime Minister Rishi Sunak recently instituted a series of tax cuts to encourage investment in the UK. Individuals could also see a substantial cut, placing around $570 back in their bank accounts every month, Sunak told Bloomberg’s Francine Lacqua in a recent interview.
UK Prim Minister Sunak on Economy, Musk, Rwanda: Full Interview. Source: YouTube
But at the same time, the government is looking to clamp down on evasion, especially in the area of crypto taxes. In May, the government considered giving HM Revenue and Customs powers to seize digital assets in the wallets of corporate tax evaders. It said it would talk with wallet providers on how to achieve this.
UK Corporate Tax Receipts 2000-2023. Source: Statista
The government also recently announced that it will require customer information from crypto exchanges starting in 2027. These records will give the government more insight into crypto spending habits, provided their requests are within the bounds of law.
