The United Kingdom’s tax collection agency is preparing to send out letters to crypto investors encouraging them to double-check that they’ve paid the correct amount of taxes on their cryptocurrency investments, according to a report from the Financial Times.
Her Majesty’s Revenue and Customs (HMRC) told CryptoUK, a crypto trade organization that works closely with regulators in the U.K., that the so-called “nudge letters” are meant to be “educational,” according to the report.
“If you receive a nudge letter it does not necessarily mean you have made an error on your tax return, but you need to ensure that you respond correctly to HMRC,” the HMRC wrote to CryptoUK.
The letters, which have not been sent out yet, will ask “cryptoasset holders to review their transactions to ensure that they are declared correctly,” and that investors have paid the proper amount of capital gains taxes and, where applicable, income taxes.
“It is likely that HMRC believes large amounts of CGT [capital gains tax] and income tax generated from cryptocurrency investments have been undeclared for tax purposes. In some cases, this could constitute criminal tax evasion,” Graham Boar, an accountant at UHY Hacker Young, told the Financial Times.