Unpaid crypto tax surged by 432 per cent from last year, HMRC says

The amount of unpaid tax that rich crypto investors owed on their investments soared by 432 per cent from last year, according to HMRC. 

Data by law firm Pinsent Masons today said that HMRC identified £2.28m in suspected underpaid tax concerning crypto assets in 2021-2022, a substantial increase from £428,000 the previous year.

Steven Porter, Partner at Pinsent Masons, said, “HMRC has made it a priority to identify suspect crypto assets. As the asset class has grown rapidly in popularity, it has come under greater scrutiny from the taxman.”

“HMRC is rapidly improving how it tracks down and traces crypto assets. Its methods of identifying tax evasion are likely to become more sophisticated.” 

HMRC said the biggest amounts of potential unpaid tax included Capital Gains Tax with £542m believed to have been underpaid and Inheritance Tax with £328m. 

“We would expect to see greater co-operation from overseas tax authorities, meaning wealthy crypto investors could find it more difficult to hide their assets off-shore,” Porter said.

HMRC has published guidance for cryptoassets holders that lays out what taxes may need to be paid and what records to keep. It has also published information for businesses on cryptoasset transaction tax.

“The tax policy may evolve as the sector develops,” HMRC says.