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New crypto box takes SA return to the moon

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While the government’s decision to create a separate cryptoasset box on the self assessment return form does not create a new obligation for taxpayers, it will assist HMRC in tracking down undeclared gains and potentially close the tax gap.

16th Mar 2023
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As part of the 2023 Spring Budget, it was announced that from tax year 2024/5 the self assessment (SA) return form is to be updated to include a ‘box’ for cryptoassets. Currently, cryptoasset gains are reported within “CG other” on the SA return.

A box is just a box – isn’t it? To an extent, yes and from the perspective of the taxpayer, this box does not create a new obligation as there is already a requirement to declare gains.

There is a risk that cryptoasset owners do not understand their tax obligations. HMRC’s market research found that the majority of cryptoasset owners were not within the ‘SA universe’, had limited understanding of capital gains and dealt with their tax affairs themselves.

When these factors are put together, non-declaration of gains does appear to be a risk. This change will make it clearer that cryptoasset gains need to be declared. Furthermore, as the market research also identified, 10% of adults owned or had owned cryptoassets, making it arguable that crypto isn’t niche anymore and should have its own box.

From the perspective of HMRC, identification of risk and tax gap is, at least partially, built from information in the SA return. As ‘SA other’ includes gains from other assets, further information is required to establish if the amounts declared are, potentially, from cryptoassets (I will spare you from the painful details). This box will remove uncertainty if cryptoassets have been declared and significantly reduce the effort to establish both the tax declared and the tax gap for cryptoassets.

It is the future that HMRC no doubt has its eyes on. Whilst they have gathered information from cryptoasset exchanges in the past, the game will change when the OECD’s “Crypto Asset Reporting Framework” (CARF) goes live (at an as-yet unknown time). This automatic exchange of information will significantly enhance the information available.

HMRC needs to enhance its risking approach and this change will make it more of a “matching exercise” by comparing CARF information against SA returns (or RTI records) to check if cryptoasset gains have been declared. A mismatch will raise eyebrows.

Whilst it may appear to be just a box, trust me, it is a herculean effort to change forms. I am unsure about the costing in the Budget red book for an additional £10m in tax, but that is a separate topic.

The world of cryptoassets is becoming less opaque and it is more important than ever to ensure that your client’s affairs are in order.

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Replies (14)

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By ireallyshouldknowthisbut
16th Mar 2023 16:29

I find most of my client are too embarrassed to declare their losses, and unlikely to use them up in the future anyhow.

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Replying to Justin Bryant:
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By JustAnotherUser
17th Mar 2023 09:35

Tell me you know nothing about crypto, without telling me you know nothing about crypto...

"Lunar"

If your entirely knowledge on a subject is limited to the headlines in the Daily Mail, you would think the largest issue in the UK right now is Gary Lineker.

We do agree on one thing, this is an advert and should be displayed as such, and I'm getting a tad annoyed at it.

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Replying to JustAnotherUser:
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By Justin Bryant
17th Mar 2023 10:47

Eh (to the comments above & below)?

What's the moon got to do with this then exactly? I am missing something very obvious here? Or is this as recondite as it seems?

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Replying to Justin Bryant:
Tom Herbert
By Tom Herbert
17th Mar 2023 09:38

By-passing the discourteous and crass tone of the comment, I'd be fascinated if you could enlighten me as to what this is advertising Justin?

*Edit, while it's nice someone agrees with me that Justin isn't the font of all crypto knowledge, I'm still at a loss as to what this is supposed to be advertising.

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Replying to TomHerbert:
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By JustAnotherUser
17th Mar 2023 10:30

Find out how advertising regulation works: ASA and CAP

When a brand gives a blogger, vlogger or online streamer a ‘payment’ (i.e. any form of monetary payment, loan of a product/service, any incentive and/or commission or a product/service has been given free), any resulting posts/videos/streams are likely to become subject to consumer protection law. When a brand also has control over the content, they become subject to the CAP Code...

.....‘Advertorial’ blogs and vlogs are more difficult to distinguish from independent editorial or user-generated content, because they appear in the same place as regular posts and tend to look very similar. ......

Viewers need to know they are selecting an ad to view/read before they engage with it..

.. A blogger has been provided a service for free here... you advertise who they are and who they are associated with and link to their sites and use their logos = we see 'advert'

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Replying to JustAnotherUser:
Tom Herbert
By Tom Herbert
17th Mar 2023 10:50

This is categorically not an advertisement, and despite your copy-paste I'm still genuinely perplexed as to how you've reached this conclusion.

I'm happy to talk you through how this article was commissioned:
1) I noticed in the red book that cryptoassets will get their own box on the SATR from 2024/5
2) Given that a fair number of our readers have clients who are in the crypto space or have at least dabbled in it, I thought it would be good to flag this
3) I contacted Dion, who when I first met him was cryptoasset lead for HMRC
4) Dion agreed to write a short overview of what has happened and why.

Dion isn't a 'blogger' or influencer, he's one of the country's leading experts on crypto tax, and agreed to do this as an awareness piece as he's passionate about the space. There's nothing advertising his services or firm either in the piece or as part of his bio and no links at all. All our tax writers work for other firms as well - should we not commission them?

I appreciate that the site runs paid ads, which are always marked with an 'in association with' or 'brought to you by' next to the author byline.

I also appreciate there's been frustration recently that this isn't as clear as some of our readers would like. This has been noted, but isn't in the editorial team's
power to change - although we have fed it up the chain.

Finally, on a broader point, the reason this site isn't behind a paywall because it's predominantly funded by ads. While you may not find some of the sponsored material useful, openly trashing it just degrades our ability to provide content. I'd be happy to back myself and the team and make this an FT-style paid-for subscription service, but decisions on AccountingWEB's business model aren't in my remit, thank goodness.

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Replying to TomHerbert:
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By Justin Bryant
17th Mar 2023 10:53

Noted and never mind that. We want to know is why is the moon relevant here?

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Replying to Justin Bryant:
By Nick Graves
23rd Mar 2023 13:45

Justin Bryant wrote:

Noted and never mind that. We want to know is why is the moon relevant here?

It's from one of those aphorisms among crypto-freaks - "Bitcoin to da moon!"

The implication being, that when fiat eventually goes full Venezbabwe, that will be where the BTC price in fiat is headed.

Akin to "Gold, bitchez!"

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Replying to Nick Graves:
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By Hugo Fair
23rd Mar 2023 19:15

Perfect summation of what is/isn't going on in the (quantum) world of crypto ... where I'm none the wiser after reading the answer!

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Replying to TomHerbert:
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By JustAnotherUser
17th Mar 2023 10:57

good response thank you, maybe your users are getting a tad knee-jerky to these things, I see the claim of 'adverts' come up often when a blog is involved....

most recent example....
https://www.accountingweb.co.uk/tech/accounting-software/mtd-itsa-delay-...

'in association with' or 'brought to you by' is not aligned to the guidance ...

"Viewers need to know they are selecting an ad to view/read before they engage with it.."

Simple solution, on the tile before users click, anything 'in association with' or 'brought to you by' could state 'Ad'... if your using the term 'in association with' or 'brought to you by' and 'advert' as the same?

Thanks (1)
Replying to JustAnotherUser:
By Duggimon
23rd Mar 2023 09:42

The one you cite is clearly an ad whereas the article above you quite wrongly complained about is clearly not an ad, I suggest you quit while you're behind.

I am fundamentally in agreement with Justin here though, the important question is how this is moon related.

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Replying to TomHerbert:
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By Hugo Fair
18th Mar 2023 13:55

A bit late to 'the party', but I'm mostly commenting because I'm lost as to what's going on here.
The 2nd post is said to be a reply to Justin who, at that point in the proceedings, has no published comment to which a reply could be made?
Although he doesn't seem to be the shy/retiring type, it's hard to make sense of the ensuing ping-pong of comments if the initial post has been deleted?

Nevertheless, I'm sure that Justin's thick hide will be relieved to know no-one considers him to be "the font of all crypto knowledge" ... it would be almighty uncomfortable to be a (typically stone) basin or other receptacle that holds holy water for the purpose of baptismal ceremonies in a Christian church.
Or did you mean 'fount'? :=)

Anyway, to answer your question about 'how this is supposed to be advertising':
* the author's box is accompanied by the "In association with" tagline; and
* you state in your comment of 17th Mar 2023 10:50 that "the site runs paid ads, which are always marked with an 'in association with' or 'brought to you by' next to the author byline"
QED?

I don't have particularly strong views on the whole crypto issue (although I would find a bargepole a useful implement if I were to encounter one in the wild) ... but I do like to tie up loose ends, of which there are many on this thread!

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By JustAnotherUser
17th Mar 2023 09:11

10 million feels like a nice round number to use, and the same number for 3 years.

Bit early for maths but if the AEA will be £6,000 and it raises 10 million & CGT is charged at the (generic for maths purposes) rate of 20% .... so over £100 million in crypto profits is going undeclared? and a new box will fix this?? (lets not talk about losses)

Amazing analysis by HMRC.

Surprising they care when the UK banking industry have an obvious conspiracy to stifle crypto growth in the UK at the same time the UK Gov what to become a crypto hub, there's barely a bank left that allows crypto transactions to exchanges now.

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By Duggimon
23rd Mar 2023 09:47

Personally I'm becoming more and more of the opinion that crypto trading below a certain threshold perhaps ought not to be taxed at all given it's essentially gambling. Or that if crypto trading below a certain threshold is taxed, gambling winnings ought to be taxed too, take your pick.

I have multiple clients involved in it and it has all the hallmarks of classic addiction behaviour and is essentially betting on whether a completely obtuse number related to nothing much in particular goes up or down.

I'm a big fan of blockchain technology as a concept and in applications across many different spheres, but crypto trading is nuts.

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