HMRC Guidelines on Voluntary Disclosure of Crypto Taxes

The tax authority clarified the procedure for voluntarily disclosing information on unpaid taxes on cryptocurrency assets. Her Majesty’s Revenue and Customs (HMRC), the UK tax authority, has released guidance on voluntarily disclosing information regarding unpaid taxes on income or profits from cryptocurrencies.

If taxes have not been paid for several years, the number of years for which information must be disclosed will depend on whether the tax was unpaid (i) despite the taxpayer taking reasonable steps; (ii) because they failed to take steps; or (iii) because they deliberately failed to disclose liability.

If the taxpayer has exercised reasonable care, their liability will be limited to the preceding 4 years.

If the taxpayer has been careless in not declaring tax obligations, information for the previous 6 years must be disclosed.

If HMRC has been deliberately misled, information on undeclared income or profits for the last 20 years must be disclosed.

If the unpaid tax remains unpaid, obligations for payment of interest and penalties may arise.

Penalties are likely to be lower if the taxpayer voluntarily discloses unpaid obligations rather than at HMRC’s request.

The amount of the penalty also depends on the taxpayer’s behavior (negligent, deliberate, or deliberate and concealed), and HMRC also provides an interest and penalty calculator.

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