Cryptocurrency investors will be subject to increased scrutiny from tax authorities with the introduction of the Organisation for Economic Co-Operation and Development’s (OECD) Cryptoasset Reporting Framework (CARF).
The CARF enables increased transparency when it comes to cryptoasset transactions, with the automatic exchange of information amongst participating authorities. It requires Reporting Cryptoasset Service Providers (RCASPs) to share details of their users and transactions with tax authorities, who can use the information to detect and tackle tax non-compliance.
Essentially, tax authorities will be capable of sharing relevant data between jurisdictions, depending on where the individual crypto investor is a resident for tax purposes.
Timeframe for implementation
The UK has declared its intent to deliver the CARF in time for exchanges in 2027.
- The CARF, including the extension to domestic reporting on UK customers, will apply from 1 January 2026;
- Individual and entity RCASPs in the UK will be expected to collect the information specified by the CARF on UK and non-UK customers from 1 January 2026, with the first reports covering the 2026 calendar year due to be reported by 31 May 2027.
Impact of the Cryptoasset Reporting Framework
Implementation of the CARF means that cryptoasset transactions can be monitored for tax purposes and taxpayers should be mindful of increasing enforcement activity from HM Revenue & Customs (HMRC).
The framework is a key component of the move to tackle tax evasion, tax avoidance, and non-compliance within the cryptoasset market. It provides clarity on transactions that may currently go unobserved – a solution to the current issue of cryptoassets being transferred and held without interacting with traditional financial intermediaries and without any central administrator having full visibility.
Under the CARF, RCASPs must
- Collect details on cryptoasset users and transactions in cryptoassets;
- Conduct the required due diligence; and
- Report the data to tax authorities.
How M+A Partners can help
Understanding your financial position and tax requirements is important when dealing with cryptoassets. Our team is here to help determine the correct tax treatment of any transactions involving cryptoassets, including calculating taxable gains or losses on cryptoassets. We will ensure any gains or losses are correctly recorded and any reliefs that can be claimed are applied.
For any help or guidance please get in touch with your usual M+A Partners contact or email enquiries@mapartners.co.uk.
