The specialist cryptoassets team at RPG Chartered Accounts, incorporating Crawfords, has been advising clients on their tax obligations relating to cryptocurrencies for many years, with an involvement in the sector since 2014. We understand cryptoassets. Our team is able to help with current year transactions, catching up with the submissions for previous years and tax planning for future transactions.
Over the years we have supported and guided investors who have varying degrees of involvement in cryptoassets for example investors:
- In their first year of cryptocurrency trading and those with years of crypto trading experience
- Who have made modest gains over a small number of transactions and others who have generated significantly higher sums over a number of years
- With investments over a multitude of transactions in mixed currencies or with a focus on one currency
- Who look at crypto investment as a sole investment or as part of a portfolio alongside other non-crypto investments
- For whom crypto is part of their business and part of their daily life, perhaps being paid in cryptocurrency.
The tax treatment of transactions
Personal investment gains are subject to Capital Gains Tax in the UK (or in certain circumstances Income Tax) and gains on disposals within a corporate structure are subject to Corporation Tax. It is essential therefore to maintain a complete and detailed record of all of your crypto transactions.
It is also important to understand that there are highly complex matching rules for purchases and sales, and gains and losses of cryptocurrencies. A poorly structured series of purchases and sales can mean you pay more in tax than you have gained in overall value so it is worth giving this due consideration before concluding any transactions.
How we can help
RPG’s specialist crypto tax team will determine the amount of tax that is due for payment, advise you what payments are due to HMRC and when they have to be paid, and make the official submission to HMRC through your Self Assessment tax return.
In terms of calculating the amount of tax to be paid, crypto exchanges will generally provide access to downloadable reports / CSV files for each financial year of trading; alternatively we will use software to extract the data via APIs. Members of RPG’s specialist cryptoasset team will then review your transaction history, taking into account any other personal, business or other considerations and carry out the calculations.
The team will also take into account any business transactions undertaken using cryptoassets such as being paid or paying for goods and services in cryptocurrency. This is a highly complex and specialist area in which points can easily be overlooked or misunderstood, and should be undertaken by an expert.
We anticipate that HMRC may look back to crypto trading records from 2016 (or earlier) so if you have not reported earlier years, please do not ignore the situation; it can still be dealt with. HMRC look more favourably on those who come forward voluntarily as opposed to those whose omissions they discover. RPG’s specialist cryptoassets team are used to advising and assisting clients with several years of outstanding transactions which need to be accounted for, tax to be calculated, disclosed and paid. If required, we will speak to and negotiate with HMRC on your behalf.
As the timing of the purchase and disposal of cryptocurrencies may have an impact on the amount of tax paid, we are able to advise you on the timeliness of future transactions from a tax perspective.
RPG’s specialist team can also advise whether it is beneficial for you to create a corporate structure for your cryptoasset trading, taking into account your full financial and business circumstances, and can advise on suitable methods of record keeping.
The wider RPG team can also advise on the accounting, bookkeeping and tax matters relating to any non- crypto business operations in which you may be involved.
HM Revenue & Customs
There has been a general lack of awareness that gains made from crypto transactions are subject to UK tax rules. HMRC are looking to redress this and published their cryptoassets manual in March 2021. This clarifies the tax implications that can arise from transactions involving cryptoassets and explains HMRC’s interpretation of the law as it relates to cryptoassets.
HMRC can now access current and historic data from crypto exchanges which allows them far greater reach in terms of investigating tax errors or fraud. Indeed HMRC are now reaching out to crypto investors through “nudge letters” to check whether those individuals have reported their tax position accurately.
What should you do?
We suggest that you speak to one of our crytoasset specialist tax advisers. Our team is able to help with current year transactions, catching up with the submissions for previous years and tax planning for future transactions. Whether you only have recent gains or if they go back a number of years, an experienced crypto tax specialist will be invaluable in guiding you through the process.
Speak to one of our specialist crypto advisors based at our offices in central Manchester firstname.lastname@example.org or call 0161 608 0000. We look after crypto tax clients based across the UK.
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