UK: FATCA, CRS guidance on voluntary disclosure of unpaid tax on cryptoassets

HM Revenue & Customs (HMRC) on 29 November 2023 issued guidance regarding voluntary disclosure of unpaid tax on income or gains from cryptoassets.

The requirements are as follows:

• Disclosure is only required if there are unpaid taxes on cryptoassets such as exchange tokens (bitcoin), NFTs (non-fungible tokens) or utility tokens. Failure to contact the HMRC regarding unpaid taxes may result in additional interest and penalties.
• To submit a report, individuals need to have a government gateway user ID and password. In case there is no user ID, one can be created during the first sign in. Additionally, before making a voluntary disclosure taxpayers need to gather details about taxable cryptoassets, determine the tax declaration period, calculate owed capital gains tax and income tax, assess any owed interest, and identify potential penalties.
• Before commencing, individuals must collect all essential information such as personal details (name, address, email and contact number), national insurance number, transaction count of cryptoasset, undisclosed proceeds or income (pre-expenses), acquisition costs, profits, cryptoasset exchange details, disposed cryptoassets count, and calculated tax and interest owed.
• The disclosure period is determined by the reason for not previously reporting or paying the correct tax amount. If the omission occurred despite taking reasonable care, individuals will be liable to pay for the past four years. In the absence of reasonable care, they need to pay for maximum of six years. If the individual deliberately misled HMRC, the maximum period will be considered as 20 years.
• The guidance further notes that for capital gains tax and income tax calculations, individuals need to determine gains after considering their personal allowance. Additionally, they need to calculate interest and penalties using the penalties and interest calculator, providing fair application and explanations if necessary. Failure to include correct interest may lead to rejection of the disclosure.
• Individuals will receive a payment reference number upon disclosure submission and need to make the payment for any calculated unpaid tax within 30 days. After HMRC checks the disclosure, they will inform the individual whether it has been accepted or not. If incorrect information is found to be provided intentionally, higher penalties may apply, and additional information might be requested during the check process.

Read a December 2023 report [PDF 642 KB] prepared by the KPMG member firm in the UK