Many people may doubt the ability of the Tax Authorities to know what they are up to. However, HMRC’s powers of detection have increased exponentially since the introduction of their “Connect” system in 2010. Statutory powers allow HMRC to obtain data from a host of sources, including financial institutions; social media; online marketplaces; and many others. Foreign Information Exchange Agreements have also uncloaked similar information sources internationally.
“Crypto” investors are now under scrutiny by HMRC and many will be receiving “nudge” letters to let them know that the Tax Authorities are watching and examining their Tax Returns to see that they are paying the correct tax on their transactions. The letters will give taxpayers an opportunity to recheck the declarations they have already made and to bring their affairs up to date, before being challenged by HMRC.
Our tax investigation specialist, Barry Luscombe, says:
“If you receive such a letter, you should not ignore it, but I would also not recommend you sign any certificate attached without first seeking expert help.”
The rise in popularity of “crypto” has inevitably given HMRC concerns about hidden wealth and unreported income and capital gains. Those who do not report correctly may find themselves liable to fines or criminal prosecution. Signing a Declaration without proper consideration could make the situation worse.”
If you receive a “nudge” letter, or have concerns about your tax affairs, please do not hesitate to contact us.