QA: CARF and CRS 2 consultation

The UK is one of the 48 jurisdictions who signed the November 2023 joint statement to declare their intent to deliver and implement the cryptoasset reporting framework (CARF).

The CARF came about to address the tax compliance issues of the limited visibility of cryptoassets and to ensure the continuation of the achievements of the Common Reporting Standard (CRS) for global tax transparency. The CARF is a standalone framework providing for the automatic reporting of crypto-related transactions between jurisdictions.

Following feedback from financial institutions (FIs) the Organisation for Economic Co-operation and Development (OECD) also approved amendments to the CRS – namely CRS 2. The objective of updating the CRS is to incorporate certain electronic money products and Central Bank digital currencies in scope. The review of the CRS also improves the level of quality of information exchange to allow tax authorities to contextualise the information received.

HMRC issued a...