Sarah Mawson and Olivia Wiggett explain how the tax authority’s new disclosure scheme will work
There have been facilities to make online voluntary disclosures to HMRC for some time now. These are commonplace for clients rectifying tax irregularities and HMRC have launched a new digital disclosure service specifically for the purpose of declaring untaxed income and gains arising from crypto assets.
The Cryptoassets Disclosure Facility, which opened at the end of November 2023, allows taxpayers and their agents to declare income and gains arising on crypto assets, including (but not limited to):
- payment coins (cryptocurrency such as Bitcoin).
- exchange tokens (for example Binance Coin).
- non-fungible tokens (NFTs).
- utility tokens.
While the introduction of this dedicated disclosure facility reflects HMRC’s approach to encouraging online disclosures, there are some marked differences in comparison to the more generic Digital Disclosure Service (DDS). The most significant of these is the request for the taxpayer or agent to provide a full set of computations for both the taxable income and/or gains arising from crypto assets, in addition to tax computations. It asks whether a commercial crypto asset calculator was used to compute the gain, what type of crypto assets are in question and what exchanges were used.
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