Frequently Asked Questions

Question 1

What is an HMRC crypto nudge letter?

Accepted Answer

HMRC sends nudge letters to individuals they believe may have unreported crypto gains. These letters aren't formal investigations but signal that HMRC has data suggesting you may owe tax. It's important to seek professional advice immediately upon receiving one.

Question 2

What happens if I ignore an HMRC nudge letter?

Accepted Answer

Ignoring a nudge letter can lead to a formal HMRC enquiry, which may result in higher penalties. HMRC rewards voluntary disclosure - coming forward before an investigation typically means lower penalties than being caught.

Question 3

How can an accountant help with crypto disclosure?

Accepted Answer

A specialist accountant can reconstruct your transaction history, calculate the correct tax owed, prepare disclosure documentation, negotiate with HMRC on your behalf, and potentially reduce penalties through the voluntary disclosure process.

Question 4

What are the penalties for unreported crypto gains?

Accepted Answer

Penalties depend on whether the error was careless, deliberate, or deliberate and concealed. Careless errors typically incur 0-30% penalties, deliberate errors 20-70%, and concealed deliberate errors 30-100%. Voluntary disclosure significantly reduces these percentages.

Question 5

How far back can HMRC investigate crypto transactions?

Accepted Answer

HMRC can typically go back 4 years for innocent errors, 6 years for careless errors, and up to 20 years for deliberate non-disclosure. This makes historical crypto transactions from 2017-2021 particularly relevant for current investigations.

HMRC Crypto Investigation Specialists

Wright Vigar

Crunch Accounting

Hodge Bakshi

Myna L2