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Pure Tax Investigations highlight that HMRC has more than doubled the number of letters they sent out to people holding cryptoassets in 2024-25, to 65,000.
Who is exposed to Crypto Tax?
HMRC knows that many cryptoasset investors have failed to report their crypto tax liabilities on related gains. While most have not returned anything to HMRC, others have failed to recognise that changing from one type of cryptoasset to another is also a chargeable event (disposal) for UK tax purposes.
The problem is exacerbated as UK investors often use international crypto trading platforms too, which are not required to share information with HMRC yet. Most readers will recognise that the cryptoassets investment market has attracted many, many people, given the intangible and informal nature of the cryptoassets investments, the ease of using the investment/exchange platforms, and of course, the previous periods of exponential growth witnessed by investors.
Beware, despite crypto buying, holding, selling, and exchanging activities feeling like mere speculation by many people, as if they were gambling (which is not a taxable activity), the selling and exchanging of cryptoassets is very much taxable.
What can you do to correct historic crypto tax reporting errors?
HMRC has published and updated its guidance about the taxation of cryptoassets over the last decade to try to make things clearer. They recently launched a new crypto tax disclosure facility, at the end of 2023, for those with historic crypto tax errors to correct.
This disclosure facility offers the most favourable treatment and light-touch approach from HMRC, especially for people who make wholly unprompted/voluntary disclosures. In most cases, there are no penalties at all, and in others, they may technically be payable, but we typically help clients suspend those indefinitely.
What has HMRC done to find cryptoassets investors?
Before the introduction of the crypto tax disclosure facility HMRC had warned people that it was gearing up to crack down on tax abuse related to cryptoassets. They have been approaching cryptoasset platforms directly for bulk records on UK resident investors to pursue them. With that data, they have been sending tens of thousands of “nudge letters” to people who they believed owed UK taxes on their cryptoasset gains.
HMRC and the UK government have also confirmed their commitment to the new international reporting framework (known as the Crypto Asset Reporting Framework (“CARF”)), which will see comprehensive information regarding crypto investors and their cryptoassets being collected from 1 January 2026 and automatically being shared with HMRC. Please note that this includes most overseas investment/exchange platforms too!
Therefore, it goes without saying that investors ought to consider the downside of waiting for HMRC to find and write to them, because the crypto tax disclosure facility provides protection from formal, longer enquiries and more serious investigations, as well as financial penalties and potentially public naming and shaming.
Tell me more about the Crypto Tax Disclosure Facility
You should not wait for HMRC to write to you, prompting your disclosure out of fear of knowing that HMRC is now armed with rich financial information. That is likely to cost you more overall, and crypto investors could even find themselves liable to penalties for deliberate actions/dishonesty, which brings with it the possibility of being named and shamed publicly too.
This streamlined disclosure facility is for investors who have not reported their cryptoasset sales and exchanges, because those transactions were generally reportable on their personal tax returns.
Has HMRC written to many people about Cryptoassets?
HMRC has confirmed the number of one-to-many informal letters/emails sent out, designed to prompt investors into checking their tax affairs to ensure they are compliant. This includes making crypto tax disclosures where errors are identified.
| Year | Total number of “nudge letters” issued |
| 2020/21 | 0 |
| 2021/22 | 8,329 |
| 2022/23 | 0 |
| 2023/24 | 27,713 |
| 2024/25 | 64,982 |
How can we help with Crypto Tax Disclosures?
If you or someone you know has been contacted by HMRC about cryptoasset gains, then we can help steer that disclosure process to keep it on track and focused, to bring about a swift and commercial conclusion.
We will fully review the buying, exchanging, and selling data so that we can robustly prepare the annual tax calculations. We deliver that all-important trusted ‘buffer’ between our clients and HMRC during their in-depth and intrusive investigations and in all voluntary disclosures too. Voluntary disclosures are recommended even where HMRC has not yet written to you.
Services offered by Pure Tax Investigations:
With over 10 years of direct experience at HMRC and over 11 years in the private sector, Amit Puri leverages his specialist tax disputes resolution expertise to analysed the figures and HMRC’s approach to crypto tax “nudge-letters”. He encourages investors to seek specialist tax disclosure advice to fix errors quickly and avoid huge penalties.
Pure Tax Investigations have become renowned for their pragmatic, client-centric approach, offering clear and bespoke tax advice tailored to each client’s unique tax concerns and business aspirations. Utilising a wide range of local and international accounting and tax knowledge, these HMRC tax investigation specialists provide peace of mind and certainty to their clients by ensuring HMRC is effectively managed.
Tax Disclosures: The tax investigation specialists in London help clients navigate the tax disclosure facilities (amnesties) available to facilitate the disclosure of historic income and gains linked to offshore accounts and assets, property rental profits, and crypto gains.
Tax Investigations: HMRC has extensive powers to carry out enquiries (compliance checks) into all tax returns to make sure an entrepreneur or business has paid the right amount of tax at the right time. Also, there are even more intrusive and in-depth investigations that are pursued; resource-intensive. Pure Tax Investigations is an independent, experienced firm of Tax Investigation Specialists that helps entrepreneurial individuals and businesses through each stage of the extensive investigation process.
- Code of Practice 8 (COP8) Advice: Pure Tax’s’ Code of Practice 8 investigation specialists offers expert guidance on “Code of Practice 8” (COP8 or COP 8), a serious tax investigation carried out by HMRC’s Fraud Investigation Service (FIS) where they suspect tax fraud or tax avoidance which has potentially led to a large loss of tax.
- Code of Practice 9 (COP9) Guidance: Pure Tax’s COP 9 investigation specialists helps to provide clarity and robust defence on Code of Practice 9 (COP9 / COP 9 in short), which are serious civil investigations undertaken by HMRC’s Fraud Investigation Service (FIS) where they suspect tax fraud has occurred and they prefer to make the allegation at the outset and recover the tax on a civil basis rather than pursue a criminal tax investigation with a view to prosecution.
CONTACT: Pure Tax Investigations, 63 St Mary Axe, London, EC3A 8AA
0203 7575 669
Image source: Amit Puri – Pure Tax Investigations
Also read: Tax Planning Tips For Small Business Owners
