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HMRC confirms issuance of “nudge” letters to cryptocurrency investors

Publications featured in include: Financial Times, Yahoo News, Business Telegraph, Coin Desk and London News Today

The nudge letters will be used to encourage cryptocurrency investors to examine whether they have paid the correct amount of capital gains tax (CGT) and income tax on their crypto holdings.

Graham Boar, partner in our Letchworth office has said: “HMRC has announced that it will begin issuing “nudge” letters to cryptocurrency investors who they believe may have underpaid tax.” 

HMRC has the ability to gain a full list of cryptocurrency holders by sending data requests to UK-based cryptocurrency exchanges and other financial institutions. 

Graham Boar adds: “It is likely that HMRC believe large amounts of CGT and income tax generated from cryptocurrency investments have been undeclared for tax purposes. In some cases, this could constitute criminal tax evasion.” 

“HMRC suspects that there is an increasing amount of hidden wealth thanks to the rise of cryptocurrencies. Many retail investors in cryptocurrencies are under the misunderstanding that HMRC is unable to find out about their crypto investments and any gains they may have made.”

“Investors should come forward to declare their cryptocurrency income. Those who are later found to have misreported their crypto holdings could be at risk of prosecution.”

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