New guidance needed to address unique aspects of cryptoassets

The government should undertake a complete overhaul of the legislation and guidance concerning cryptoassets and their recognition and treatment by the UK tax system for both direct and indirect taxation says the Chartered Institute of Taxation.

In its response to the government’s call for evidence on the taxation of decentralised finance involving the lending and staking of cryptoassets the institute suggested that unrepresented taxpayers would find the present system difficult to understand and comply with thus creating a significant risk of non-compliance.

It said further that current tax law does not cater well to the unique nature of cryptoassets largely because of the large number of transactions that can take place and because so many of them occur without any commercial realisation of the profits arising.

The CIOT believes that implementation of any of the three options put forward in the consultation would probably...