HMRC Crypto Nudge Letter: What to Do Next
You've received an HMRC crypto nudge letter. Here's exactly what it means, what you should not do, and how to respond safely without triggering a full enquiry.
HMRC has been sending "one-to-many" crypto nudge letters in waves since November 2024. The wave that started in mid-2026 is the biggest yet, powered by data HMRC now receives directly from UK-serving exchanges under the Crypto-Asset Reporting Framework (CARF). If one has landed on your doormat or in your online HMRC inbox, this is what it actually means and what to do next — calmly.
What the letter says
The typical letter opens with something like: *"We have information that suggests you may have received income or made gains from cryptoassets that you need to tell us about."* It asks you to check your records for the specified tax year(s) and, if you owe tax you haven't declared, to disclose it via the Digital Disclosure Service (DDS). It usually gives you 60 days.
Crucially, it is **not** an opening of a formal enquiry (COP9, COP8, etc). It's a prompt. The tone is deliberately soft because HMRC gets much better voluntary compliance from a nudge than from a full investigation.
What NOT to do
Do not ignore it. HMRC only sends these letters when they already have data suggesting there might be undeclared tax. Ignoring the letter almost guarantees a follow-up enquiry, and enquiry penalties are far harsher than voluntary disclosure penalties.
Do not immediately fire off a defensive letter denying activity. HMRC has CARF data now — they can see your Binance, Coinbase, Kraken and Crypto.com transactions. Denying activity they can prove will end badly.
Do not delete records, close accounts, or move funds. Any pattern that looks like evidence tampering after receiving the letter will meaningfully worsen your penalty position if there is undeclared tax.
What to do this week
Step one: read the letter carefully. Note which tax years HMRC references and any specific asset classes or amounts they mention.
Step two: reconstruct your actual position for those years. Pull every exchange CSV, scan every self-custody wallet, and calculate your Capital Gains and Income for each tax year mentioned. Apply HMRC's Section 104 pooling, same-day, and 30-day rules — get this right, because it's what you'll be defending. A tool like CryptoLens does this in one pass; doing it by hand is possible but a heavy multi-day exercise for anyone with more than a few dozen trades.
Step three: compare what you owe to what you declared. Three outcomes:
1. **You declared correctly.** Reply to HMRC (or use their online form) confirming your position and referencing your Self Assessment for the relevant year. Keep evidence to hand — HMRC can still open an enquiry, but you've made it clear you have nothing to disclose. 2. **You owe additional tax.** Use the Digital Disclosure Service (DDS) to declare within the 60-day window. Because the disclosure is voluntary and prompt, penalties are typically 0–30% of the tax owed rather than the 30–100% you'd face after a discovery assessment. 3. **You're not sure.** Get professional help — a UK-crypto-aware accountant. Do not guess and hope, and do not blindly agree to an amount you haven't independently verified.
About the penalties
For a voluntary DDS disclosure where you cooperate fully, penalties are typically 0% (careless behaviour where you tell HMRC before they'd have found it) to 30% (deliberate behaviour, prompted disclosure). If HMRC assesses you after the 60-day window, penalties climb to 35–100% and interest applies on top. The economic case for disclosing quickly, if there's anything to disclose, is overwhelming.
What to send with your disclosure
Whether the answer is "nothing owed" or "here's what I owe", back it up. HMRC will accept a tax summary from a reputable tool as the primary schedule, provided it applies the correct pooling rules and shows the arithmetic. CryptoLens exports a filing-ready SA108-format summary plus a full CSV of every disposal with cost basis, proceeds, gain/loss, and matched acquisition — exactly what an HMRC officer will ask for if they open an enquiry.
What to expect next
If your disclosure is complete and reasonable, HMRC will typically confirm the amount, issue any correction notices, and close the matter within a few months. If they think more is owed, they'll open a formal enquiry — you'll get a letter with a case reference and clear next steps. At that point, professional advice becomes essential.
The permanent fix
Once you're through this, keep clean records going forward. Every tax year, generate a summary at year-end and file it with your Self Assessment. If you use CryptoLens, this is a two-click job in April; if you use a spreadsheet, block out a weekend. Either way, the goal is to never see another nudge letter — and if one comes anyway, to be able to reply "already reported, here's the reference" within an hour.
Frequently asked questions
Do I have to reply to a crypto nudge letter?
You should. HMRC only sends these when they have data suggesting undeclared tax. Ignoring one almost always escalates to a formal enquiry, which carries much higher penalties.
How much time do I have to respond?
The letter usually gives 60 days. Use every day of it to reconstruct your position accurately — but do respond before the deadline.
Can HMRC actually see my crypto activity?
For 2026 onwards, yes. The Crypto-Asset Reporting Framework (CARF) requires UK-serving exchanges to report customer transactions to HMRC each year. Self-custody wallets remain private, but HMRC often gets partial data via on-ramps and off-ramps.
Should I use an accountant?
If the amounts are meaningful, or if you're unsure of your position across multiple wallets and years, yes. A crypto-fluent UK accountant will save you money in almost every case where genuine tax is owed.
Full nudge-letter guide + template response
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