Crypto tax file: which documents you really need
Date: | Week: 36 | Reading time: 7 minutes | Updated: Author: Tyler Dijst
In short
Which crypto tax documents does HMRC want to see? Usually four kinds of records: bank statements for your deposits, statements from every platform, a balance on a set date and records for anything that happened off the blockchain. Whether that closes your file depends on your own history.
Paucitas is an independent expert firm in the Netherlands that establishes where crypto wealth came from, in hundreds of cases a year. Questions about the source of funds usually come from the tax authority or the bank. In practice we often find there is more to back up than people thought.
Get in touch with Paucitas or ring +31 20 244 5774. You will soon know what is still missing from your file.
In a nutshell
A loose explanation rarely convinces anyone. Records that back each other up do. Paucitas works out which records you have, what is missing and how it all fits together. Your tax return stays with you or your adviser.
You have had a letter or a question from HMRC about your crypto. Perhaps it worried you, or you are not sure where to start. That is completely understandable. Many people bought crypto years ago and did not keep track of everything at the time. The good news: with the right records, there is often far more to back up than you think.
Which crypto tax documents does HMRC ask for?
It depends on the question, but it almost always comes down to four kinds of records. They follow the questions any reviewer asks: where did the money come from, what happened to it, what was it worth on the relevant date, and what happened off the blockchain?
- Bank records for your deposits and for the source of that money.
- Statements from every platform, such as an exchange, including accounts you no longer use.
- A balance on a set date, per address and per platform, with a custom quote source.
- Records for anything off the blockchain, such as internal conversions or a private purchase.
Screenshots of prices and printouts from portfolio apps usually do not count, because they cannot be traced back to a source. HMRC explains that you must keep records on its page on paying tax when you sell cryptoassets.
Why is one overview often not enough?
Because the records have to match. A deposit on your bank statement should show up at a platform. A withdrawal from that platform should be traceable on the blockchain, with a transaction hash. Only when those links connect does a file hold together. A total without that backing tends to raise new questions.
That is often the tricky part. A platform changed its name, an old email address no longer exists, or a wallet slipped out of view. That is very common. It does not mean you did anything wrong, only that the story needs to be pieced together again.
Not sure where to start? Let Paucitas take a look with you. You can ring us any time, 24/7, on +31 20 244 5774.
What if a document is missing or a platform no longer exists?
Then there is usually more you can do than you expect. Bank statements, your inbox and the blockchain itself remain, even when a platform has gone. Together those trails can often make the amounts plausible. A reconstruction from memory does not hold up; one built from records often does. Read how that works in reconstructing crypto history when an exchange has gone.
What matters is that a gap is honestly named as a gap. A file that says what can and cannot be established inspires more confidence than one that seems to know everything.
An example from practice
A man received questions from the tax authority about crypto he had bought years earlier. All he had left were a few screenshots, and he was sure one of the platforms no longer existed.
Through three old payments to a payment provider, Paucitas found the platform again, and through the blockchain the withdrawals to his own wallet. His adviser could then answer with records instead of an explanation.
Paucitas takes privacy very seriously and never shares clients' personal details. This is a composite example: names, amounts and details have been changed. The situation is one we see in practice.
Why are tax authorities asking about crypto more often?
Because more data is becoming available. Crypto service providers are starting to report customer data to tax authorities, and HMRC has set out which cryptoasset data will be reported. Read more in DAC8 and the reporting of crypto balances. If your file is in order now, you are in a stronger position later.
What Paucitas does for you
Paucitas works it all out for you: your transactions, the route of the money, the platforms you used, the documents and the timeline. Paucitas also reads through your emails, messages and other communication with platforms, so you get the full picture of where the money came from and where it went, step by step. Paucitas does all tracing itself, without tracing tools. You receive a report that anyone can follow and understand step by step, including your adviser and the tax authority.
- What we do not do: tax advice or your tax return. Paucitas provides the evidence; the return is for you or your adviser.
- Costs: every investigation is tailored. You get a bespoke quote in advance that we go through together, with no surprises.
- Turnaround: from the same day to around two weeks.
If the file has to go to your bank, see the source of funds file for the bank. If you work with an accountant, read backing up the source of crypto for your accountant.
Want to know whether your file is complete? Get in touch for a free intake, or ring +31 20 244 5774. Via the form you will hear from us within 1 to 3 hours.
Sources: GOV.UK, tax when you sell cryptoassets; GOV.UK, reporting cryptoasset data to HMRC.
Do you have questions about this blog?
Feel free to get in touch with Paucitas. Paucitas can be reached by phone 24/7, including evenings and weekends. Through the contact form we usually reply within 1 to 3 hours, and we answer e-mail within 24 hours.
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Frequently asked questions about crypto tax documents
Which documents do I need for my crypto?
Paucitas usually asks for bank statements for your deposits, statements from every platform, a balance on a set date and records for anything off the blockchain. We are happy to look at what your case needs.
What if a platform where I held crypto no longer exists?
Paucitas then works with what remains: your bank statements, your inbox and the blockchain. Together they often make the amounts plausible. We set that out for you.
Does Paucitas do my tax return?
Paucitas does not do tax returns and provides the evidence for your crypto holdings and where they came from. The return is for you or your adviser.
How long does it take to get a file in order?
Paucitas takes anything from the same day to around two weeks, depending on your situation. You get a bespoke quote in advance.
Can Paucitas work with my accountant?
Paucitas is happy to work with your accountant. We provide the facts in a report your accountant can follow step by step. The tax judgement stays with your accountant.
From Amsterdam, for the whole of the UK
Everything can be done fully online. Prefer to meet in person? You are very welcome at our office in Amsterdam, by appointment.
Paucitas is an independent expert firm based in the Netherlands that, for clients across the UK, investigates investment fraud and crypto fraud, establishes the origin and legitimacy of crypto assets and prepares expert reports for legal proceedings and compliance.
Your own situation
If you are reading this, you probably have a question about your own situation. That is exactly what Paucitas does.
The first step is contact by phone. You can book that call by phone or through the contact form, so you do not have to wait. In the call we look together at what can factually be established in your case and what Paucitas can examine for you.