What does the new Cryptoasset Reporting Framework mean for taxpayers?
HMRC has confirmed its commitment to the Cryptoasset Reporting Framework (the CARF), a tax transparency agreement that introduces the automatic exchange of information between jurisdictions, in respect of individuals who invest in cryptoassets. The UK, which officially implemented the CARF on 1 January 2026, is one of over 50 countries that have so far signed up to the information exchange.
It is anticipated that a significant amount of data relating to income and gains arising from cryptoassets will be shared between Cryptoasset Service Providers and tax authorities in the UK and other jurisdictions, as part of the global drive to increase tax transparency. HMRC will no doubt be looking forward to actively utilising the data it receives, to identify individuals who the department believes may not have fully reported all their income and gains.
What options do individuals with historic non-compliance have?
In order to encourage individuals with historic non-compliance in their tax affairs to come forward and make a disclosure, HMRC had previously launched the Cryptoasset Disclosure Facility. This facility remains in place and is available to cryptoasset investors who want to bring their tax affairs up to date.
However, the Cryptoasset Disclosure Facility is not without its flaws. For example, unlike with other HMRC disclosure facilities, there is no option to separately notify the intent to make a disclosure and then follow this up with the full disclosure once all facts are known. This can lead to a greater risk that HMRC might discover an issue and contact the taxpayer before they have a chance to come forward, thereby making the disclosure ‘prompted’, which would result in higher financial penalties.
This is especially a risk as we know that it is not always easy for individuals with cryptoassets to obtain information from third parties about the income or gains generated, especially when multiple exchanges have been used and/or exchanges cease to exist. Even once the information is obtained, it can be time-consuming to identify the reportable figures due to the complexity of the calculations and the volume of transactions to consider.
It is therefore essential for anyone who thinks they may have unreported income or gains from cryptoassets, to review their position and take steps to correct their tax affairs as soon as possible.
Crypto issues are complex so before making any approach to HMRC, specialist advice should be sought. Please, therefore, contact our Tax Disputes and Investigations team for further advice.