HMRC has issued a statement warning individuals that they will soon be issuing “nudge” letters specifically in regards to crypto asset holdings.
These “nudge” letters are yet to be circulated, but City A.M. checked in with Zoe Wyatt, partner and crypto asset specialist at Andersen UK.
“These nudge letters are likely to have been automated and issued to anyone that has bought and sold crypto, regardless of whether they have got their reporting and tax payments right,” Wyatt said.
“In our view, it would be fair to say that most underpayments will not have come from wilful evasion, but rather ignorance.”
Wyatt said this will ring alarm bells for some who are delinquent, but not lead to wholesale disclosure, through fear of penalties and remaining ignorant as to the powers of HMRC to obtain information, and also of the account holder’s tax obligations on crypto transactions.
“HMRC are likely to have limited resources in opening enquiries into all of the taxpayer account information that they have received and would achieve greater compliance and collection of underpaid taxes if they opened a crypto tax amnesty,” Wyatt continued.
“Those choosing to ignore a nudge letter now move from careless to deliberate – the consequences of which are maximum penalties and potentially criminal prosecution.”