Is an HMRC crypto letter an investigation?

Usually not. These letters are typically prompts based on data HMRC holds, inviting you to check your position and use the disclosure route if needed. Ignoring one is what invites escalation.

How many years can HMRC go back for crypto tax?

Under the disclosure guidance, four years if you took reasonable care, six years if you did not take enough care, and up to twenty years where tax was deliberately not paid.

Should I respond before I know my numbers?

Compute first, respond second, within any stated deadline. A response based on your actual computed position, or a disclosure with real figures, beats a panicked guess in every scenario.

What if I compute my position and owe nothing?

That happens often, older years had allowances up to £12,300 and losses count. Keep the computation and its working as your record, and respond to the letter accordingly.

Got an HMRC crypto letter? Do these things in this order

A letter from HMRC about your cryptoassets does a specific thing to a person’s chest. Before anything else, one calming fact. These letters are, in most cases, prompts rather than accusations, HMRC writing to people its data suggests hold crypto, inviting them to check their position. The people who end up in real trouble are overwhelmingly the ones who ignore the letter, not the ones who received it. Here is the order of operations.

First, read what it actually asks

Letters differ. Some ask you to review your affairs and respond by a date. Some point you at HMRC’s cryptoasset disclosure facility. Note the deadline, note what is asked, and do not respond with guesses in either direction. “I probably owe nothing” and “I probably owe a fortune” are both positions people take before computing, and both are frequently wrong.

Second, compute your real position, privately

You cannot decide anything until you know your actual numbers, every disposal matched under the UK rules, every year, with the allowances that applied then. This is precisely the computation TaxHash performs, and one property of it matters more than usual this week. It runs entirely on your machine. Importing your full history into a cloud service while HMRC’s letter sits on your desk makes people understandably nervous. Here, the import, the matching and every report happen in your browser, nothing is uploaded, and you can verify that in the network tab. Free below 1,000 transactions, all years computed together.

Three outcomes are possible, and all three are better known than unknown. You owe nothing, common, since older years carried allowances up to £12,300 and losses offset gains. You owe something manageable. Or you owe something serious, in which case the earlier you know, the more options you have.

Third, understand the disclosure route before you need it

HMRC’s voluntary disclosure guidance for cryptoassets sets out the machinery. You gather your transaction details, calculate the Capital Gains Tax and Income Tax owed, add interest, which runs daily from each original due date, and settle within 30 days of submitting the disclosure. How far back you go depends on behaviour, in HMRC’s own framing. Four years where you took care but still underpaid. Six years where not enough care was taken. Up to twenty where tax was deliberately unpaid. Those categories carry different penalties too, which is one of several reasons the next section exists.

Fourth, know when this stops being a DIY job

Compute your own numbers always, it makes every later conversation cheaper. But bring in a professional when the letter mentions an enquiry or a compliance check rather than a review, when the disclosure would span many years or serious sums, when any part of your history involves trading-versus-investing questions or DeFi characterisation, or when the behaviour categories above are genuinely arguable, because “careless” versus “deliberate” is a legal judgement with a twenty-year swing attached. The vetted professionals in our directory handle exactly this, and handing one a complete, matched, per-disposal computation instead of a shoebox of CSVs cuts their hours and your bill substantially.

What not to do

Do not ignore it, the guidance is blunt that unpaid tax attracts additional interest and penalties, and silence converts prompts into enquiries. Do not delete anything, chains are public and exchanges keep records, so deletion changes nothing except how your behaviour is categorised. And do not respond past the deadline with nothing, if you need more time to compute properly, saying so beats vanishing.

The letter is a question, not a verdict. Compute the answer, on your own machine, today, and then respond from knowledge. General information, not legal or tax advice, and for an enquiry already underway, professional representation is worth every penny.