Got a scary crypto tax letter from HMRC, IRS, CRA, or ATO? Don’t panic. Here’s the step-by-step guide to responding, avoiding penalties, and protecting yourself.
Intro
The worst fear for a crypto trader? A letter from the tax office about undeclared crypto.
But don’t panic — here’s exactly what to do next, whether you’re in the UK, US, Canada, or Australia.
Why You Got the Letter
- HMRC/IRS/CRA/ATO all now have exchange-reported data.
- If what they see doesn’t match your tax return → 🚩 red flag.
- They’re targeting everyday traders, not just whales.
Step 1: Don’t Ignore It
- Ignoring = bigger fines + possible investigation.
- Letters usually offer a chance to voluntarily disclose.
Step 2: Gather Your Records
- Exchange CSVs.
- Wallet transactions.
- DeFi/NFT trades.
Step 3: Understand the Risk
- HMRC penalties = up to 100% of underpaid tax.
- IRS penalties = fines + possible criminal charges if fraud.
- CRA/ATO penalties = up to 50% of owed tax + interest.
Step 4: Respond Professionally
- Don’t send messy spreadsheets.
- Tax offices want a clean, reconciled report.
- If you admit errors but show a compliant report, you often avoid the worst penalties.
Final Thoughts
A letter doesn’t mean “game over” — it means time to act fast.
👉 At TaxAnon, we take the panic out of tax letters by producing HMRC/IRS/CRA/ATO-ready reports in 48 hours.