The crypto-accountants are coming!

It may sound like a sensational sci-fi script - but with crypto-currencies growing in adoption and being used in an increasing variety of ways, questions are being asked by accountants about how they should account for crypto gains (and losses!).

In The Accountants' Club, a newly launched community where accountants share knowledge, best practices and ideas, the topic has recently started to gain momentum.

Comments include many accountants saying they were seeing far more enquiries concerning cryptocurrency and expected to see that increase.

Tax rules are still evolving around cryptocurrency as well as another emerging area, NFTs (non-fungible tokens).

Large fluctuations in price, the complexities around valuations and high transaction frequencies all create challenges for taxpayers and their advisors.

Here are three recommendations for accountants facing questions around cryptocurrency and related assets:

-         Check out HMRC’s first manual on the taxation of crypto-assets. It’s pretty clear, and HMRC is trying to be pragmatic in its approach rather than making up new rules for this area.

-         Encourage rigorous record keeping. That’s always been a mantra of accountants, of course, with crypto-customers often conducting multiple transactions a day, and hundreds or thousands in a year, they are expected to record details of everyone. Even just a spreadsheet detailing their activities and transactions would be a prerequisite.

-         Prepare a strategy for cryptocurrency in your firm, with clear guidelines for your colleagues and communications on your capabilities. Those firms who present themselves as specialists could develop an important business line to help grow their business.

Ultimately, this is ‘just another tax issue’, but undoubtedly it’s potentially complex. However, grasping the initiative and promoting your capabilities in this area could help position you as a firm that is at the leading edge of tax and compliance, and so benefit your wider business.

After all, who wouldn’t want a crypto-accountant on their side!

To join the conversation, register for The Accountants' Club here and never miss an industry-leading conversation.