Businesses

Business a substantially more complex area and so not covered entirely here. Suffice to say that the main challenge we tend to come across for businesses is banking.

Mainstream banks are not comfortable with crypto (and probably see it as a competitor to their normal business), and so rather than embracing it and seeking to develop their offerings to include it, they have put barriers in place so that their accounts are either difficult to use or crypto asset owners are simply not permitted to do so.

Other challenges that individuals have with crypto apply equally here also.

Guidance and professional support

As the crypto space continues to mature there is an urgent need for greater comprehensive and standardised tax guidance.

Yes, we have HMRC guidance to steer us on crypto asset matters, but none of it is based on specific legislation, and it relies on the assumption that the use of existing principles is the correct way for HMRC to treat the transactions.

As they become ever more complex it is likely at some stage there will be litigation around matters that offer more than one interpretation, since the sums involved in some cases can run to many millions.

Globally, governments and regulatory bodies should collaborate to create clear frameworks that address the unique challenges posed by cryptocurrencies.

Continued and even regulated development of user-friendly tools and platforms for accurate and automated tax reporting could alleviate the burden on crypto asset owners.

Substantial training is needed for accountants and tax advisers alike to ensure they understand this technology, the tax consequences, reporting requirements and not least the pitfalls in data that could lead to errors being made.

At the heart of getting this right is a complete need, off the back of greater guidance, to greater access to education on the subject for all.

In conclusion, while the world of cryptocurrency offers unprecedented opportunities, it also presents unique challenges in the realm of taxation.

As governments grapple with the need to adapt their regulatory frameworks, crypto asset owners must stay informed, seek professional advice and advocate for clearer guidelines to ensure a smoother journey through the complex terrain of crypto taxes.

Phil Kinzett-Evans is a tax partner at UHY Hacker Young