The Organisation for Economic Co-operation and Development has opened a consultation into including cryptoassets in the existing Common Reporting Standard. What does this mean for you?
(3 minute read)
Today’s tax tip explains:
- The problems with reporting cryptoassets
- A solution?
- Where do we go from here?
The Issue with reporting Cryptoassets
Cryptoassets have been in the spotlight for a few years now, but tax legislation is yet to catch up.
The most common form of cryptoassets is cryptocurrency. But despite being called ‘currency,’ HMRC doesn’t consider these assets to be money. In addition to this, because cryptoassets can be transferred without traditional intermediaries, reporting lacks transparency.
Many taxpayers don’t know what, if anything, they need to report. Similarly, HMRC’s guidance is often unclear.
They recently sent out nudge letters to remind cryptoinvestors of their obligations and clear up misunderstandings.
However, despite this step, transparency is still a concern.
That’s why the Organisation for Economic Co-operation and Development (OECD) has opened a consultation over the treatment of cryptoassets.
About the Consultation
The OECD is looking for input on bringing cryptoassets under the scope of the existing Common Reporting Standard (CRS).
The CRS is an international system based on reporting taxpayer financial information to prevent tax evasion.
If cryptoassets are brought into the scope of CRS, banks and exchanges would be required to automatically report on cryptoasset activity in the same way they currently report traditional financial activity.
This could potentially improve transparency, but may do little to improve transparency where cryptoassets are held externally.
If you’d like to make your opinion on the subject known, the OECD request that you format your input in a Word document and submit it via e-mail. Responses should be sent to email@example.com.
The consultation will run until 29th April 2022, so make your opinion known before then!
Where do we go from here?
The world of cryptoassets is still new and it will take time for legislation to adjust. In the meantime, the rules can be difficult to fully understand.
Despite this, more and more people are choosing to get involved in crypto.
Mistakes are easily made and can be costly. As a result, you should consider speaking with an accountant to ensure you’re taking all necessary steps to report your activity and paying any tax you owe.
Contact us at 01772 788200 (or WhatsApp 07787 010190 out-of-hours) to book a crypto consultation with us! The Tax Expert team are here to support you with all things tax so you can invest with confidence.
Kind regards Ilyas