Cryptocurrency Tax Enforcement Measures In The U.K. And Canada, Compared By A Crypto Tax Lawyer

Crypto Tax Enforcement in the UK vs. Canada: At a Glance

Cryptocurrency tax compliance is becoming increasingly important for entrepreneurs, investors, accountants, and crypto traders navigating global digital asset markets. Since this comparison first ran in January 2026, the UK’s tax authority, HM Revenue & Customs (HMRC), has released hard numbers on what its crypto enforcement campaign has actually recovered, and Canada’s own Crypto-Asset Reporting Framework (CARF) timeline has changed. This update reflects both.

Background on UK HMRC Cryptocurrency Tax Reporting Requirements and Canadian CRA Equivalents

HMRC’s crypto disclosure campaign launched in November 2023, inviting UK taxpayers to come forward on unpaid tax tied to exchange tokens, NFTs, and utility tokens. According to data obtained through a Freedom of Information request by compliance firm Identomat, HMRC has processed 502 settlements across the 2024/25 and 2025/26 tax years, worth a combined £8,328,132. The trend is the important part: settlement volume actually dropped, from 280 cases in 2024/25 to 222 in 2025/26, while the average settlement size grew sharply, from roughly £12,654 to roughly £21,552. HMRC has also sent tens of thousands of “nudge letters” to suspected non-filers on top of the formal disclosure route, and UK crypto platforms have been required to collect detailed transaction records from customers since January 1, 2026, ahead of the first cross-border CARF exchange expected in 2027.

Canada has been running a parallel, if less publicized, campaign. The CRA has told The Canadian Press that its dedicated cryptoasset program, staffed by 35 auditors working on more than 230 files, has recovered over $100 million CAD in unpaid tax over the past three years. The CRA also estimates that roughly 40 percent of taxpayers using crypto platforms are either non-filers (about 15 percent) or high-risk for underreporting (about 30 percent). Unlike HMRC, which relies primarily on voluntary disclosure and nudge letters, the CRA has turned to a court-authorized tool called the Unnamed Persons Requirement (UPR), which compels a company to identify an entire class of customers without accusing the company of wrongdoing. The Federal Court has granted a UPR against a Canadian crypto company only twice: against Toronto-based Coinsquare in 2020, and against NFT platform Dapper Labs in September 2025, where the CRA’s initial request covering roughly 18,000 users was negotiated down to about 2,500. The CRA has stated it cannot yet estimate the number or value of reassessments that will result.

Both countries are converging on CARF, but they are no longer on the same clock. Budget 2024 originally proposed that Canadian crypto-asset service providers apply CARF rules starting with 2026, matching the UK’s timeline. Budget 2025 deferred that start date. Under the current legislative proposals creating Part XXI of the Income Tax Act, the first Canadian CARF reporting period is now the 2027 calendar year, with the first information return due before May 2, 2028. That means 2026 is a preparation year for Canadian crypto-asset service providers and investors, not a live reporting year, and the CRA will be working with CARF-sourced data roughly a year behind HMRC.

Key Issues and Findings in UK Cryptocurrency Tax Compliance Versus Canadian Frameworks

Three patterns in the UK’s settlement data are worth pulling out, because they map onto where Canadian enforcement is headed.

Fewer disclosures, bigger recoveries. The drop in UK settlement volume paired with rising average settlement size suggests HMRC’s targeting has become more precise, identifying investors with larger undisclosed positions rather than processing a high volume of small corrections. The CRA’s own 40-percent non-compliance estimate, combined with its acknowledgment that it currently has “no way to reliably identify taxpayers operating in the crypto space” without compelled disclosure orders, suggests Canada is earlier in this curve, and the CARF deferral stretches that curve out further.

Voluntary disclosure works best before the data arrives. HMRC’s approach and Canada’s Voluntary Disclosures Program (VDP) share the same core design: relief is available only if the taxpayer comes forward before the tax authority already has, or is reasonably about to have, the relevant information. A disclosure filed after a crypto-asset service provider has already reported a taxpayer’s activity, or after the CRA has already compelled that data through a court order, generally will not qualify as voluntary.

Characterization risk changes the size of the exposure, not just whether it exists. This is where Canadian law has moved furthest since this comparison first ran. The Tax Court of Canada’s decision in Amicarelli v. The King, 2025 TCC 185 (see the firm’s case analysis), confirmed that a taxpayer’s Bitcoin holdings on the failed QuadrigaCX exchange were held on income account rather than capital account, based on her intention to profit, her frequency of purchases, and her active monitoring of the market. The taxpayer had funded her Bitcoin purchases through a second mortgage, RRSP withdrawals, and high-interest credit cards, and claimed a non-capital loss of roughly $505,142 after her account balance vanished when QuadrigaCX collapsed in December 2017. A Canadian crypto investor who assumes their gains, or losses, are automatically capital in nature may be significantly misjudging their true tax position, a characterization issue that surfaces regularly during a CRA cryptocurrency tax audit.

The table below summarizes where the two regimes currently stand.

David J. Rotfleisch, founding tax lawyer and CPA at Rotfleisch & Samulovitch, and a Law Society of Ontario Certified Specialist in Taxation, puts the comparison this way:

David J. Rotfleisch, founding tax lawyer and CPA at Rotfleisch & Samulovitch, and a Law Society of Ontario Certified Specialist in Taxation, puts the “HMRC’s numbers show what happens once a tax authority has real exchange data instead of guesswork. CRA is heading to the same place under CARF, just a year later than originally planned. The extra runway created by Canada’s deferral is useful, but it is not indefinite.”

Implications for Crypto Investors in UK and Canadian Cryptocurrency Tax Regimes

For Canadian taxpayers with unreported crypto activity, whether trading gains, mining income, staking rewards, or crypto held on a foreign exchange, the UK’s experience offers three practical points.

1. First, the population of non-compliant Canadian crypto holders is not a fringe group; the CRA’s own 40-percent estimate puts it in the mainstream.
2. Second, the CRA is not short on legal tools even before CARF arrives, as the Coinsquare and Dapper Labs Unnamed Persons Requirement orders demonstrate, and the government’s April 2026 introduction of Bill C-29, the Financial Crimes Agency Act, signals further escalation aimed partly at digital-asset-linked financial crime.
3. Third, the CARF deferral gives Canadian investors a longer runway than their UK counterparts before an exchange’s own reporting starts corroborating, or contradicting, what a taxpayer has filed, but that runway ends with the 2027 reporting period and the information returns due before May 2, 2028.

None of this means every Canadian crypto holder with a filing gap needs to panic. It means the extra year Canada bought itself through the CARF deferral is meant to be used, not wasted. A disclosure made today, before CARF data starts flowing and before the CRA’s audit team expands further, still has a real chance of qualifying for VDP relief. A disclosure made after the 2027 reporting period generally does not.

Takeaway

The UK’s £8.3-million settlement figure is not really a story about the UK. It is an early look at the enforcement pattern CARF is designed to produce everywhere it is adopted, Canada included: fewer, larger, better-informed reassessments replacing broad voluntary compliance. Canada bought itself an extra year on that timeline through the Budget 2025 deferral, with the first Canadian CARF reporting period now set for 2027 and the first information returns due before May 2, 2028. Canadian crypto investors with gaps in their reporting history should treat that extra year as a deadline to prepare for, not a reason to delay.

Pro Tax Tips

• Before assuming a crypto gain or loss is capital in nature, take a hard look at trading frequency, financing methods, and how actively the account was managed, since Amicarelli shows the CRA and the courts will look past the label a taxpayer puts on the activity.
• Anyone with unreported crypto income should treat a crypto voluntary disclosure as time-sensitive rather than something to get to eventually, because Canada’s 2027 CARF reporting period and the information returns due before May 2, 2028 put a real, if slightly delayed, expiry on the voluntary part of the program.
• Keep detailed, contemporaneous records of every disposition, every transfer between wallets, and every exchange used, since incomplete records are one of the most common reasons a CRA crypto audit escalates.
• Given how fact-specific the business-versus-capital determination has become, this is not a do-it-yourself exercise; work with an experienced tax law firm in Toronto before filing anything with the CRA, and before assuming last year’s tax treatment still holds.

What defines a cryptocurrency tax event in the UK and Canada?

In both countries, disposing of cryptocurrency, whether by selling, trading, or spending it, is generally a taxable event. In Canada, the resulting gain or loss may be taxed as a capital gain or as business income, depending on the taxpayer’s conduct and intention.

How does cryptocurrency tax reporting differ between the UK and Canada?

UK crypto platforms have been required to collect detailed transaction records since January 1, 2026, with reporting to HMRC and the first international exchange expected in 2027. Canadian crypto-asset service providers are on a deferred timeline, with the first CARF reporting period set for 2027 and the first information return due before May 2, 2028.

Are there exemptions from CARF reporting?

Certain assets are excluded from CARF’s scope, including central bank digital currencies and specified electronic money products. Standard cryptocurrencies, stablecoins, and many NFTs used for payment or investment purposes are generally within scope, subject to the specific statutory definitions.

What penalties apply for cryptocurrency tax non-compliance in Canada?

Depending on the circumstances, penalties can include gross negligence penalties, repeated failure to report income penalties, and in serious cases, prosecution for tax evasion. Under the proposed CARF rules, a taxpayer who fails to provide a requested taxpayer identification number to a reporting service provider may also face a separate $500 penalty per failure, subject to certain exceptions.

Has the CRA laid criminal charges for crypto tax evasion?

According to the CRA’s own statement to The Canadian Press, no criminal charges have been laid in a crypto tax case since 2020, even as civil audit recoveries have exceeded $100 million CAD over three years. The CRA has instead relied on compelled disclosure orders and audits, and the planned Financial Crimes Agency under Bill C-29 signals a push toward more aggressive enforcement of financial crime connected to digital assets going forward.

When does CARF actually take effect in Canada?

Budget 2024 originally proposed 2026. Budget 2025 deferred that start date. Under the current legislative proposals for Part XXI of the Income Tax Act, the first Canadian CARF reporting period is the 2027 calendar year, with the first information return due before May 2, 2028. Accordingly, 2026 is a preparation year, not a live reporting year.

Will CARF end my ability to file a voluntary disclosure for past crypto activity?

Not immediately, but it will narrow the window. A disclosure is only accepted as voluntary if the CRA does not already have, or is not already in a position to obtain, the relevant information. A disclosure filed after CARF data starts reaching the CRA for the affected activity is far less likely to qualify.

How many Canadians are non-compliant with crypto tax reporting?

The CRA has told The Canadian Press that roughly 40 percent of taxpayers using cryptoasset platforms are either non-filers or at high risk of underreporting, based on a review of over 230 files by its 35-person cryptoasset audit program.

What did the Amicarelli v. The King decision decide about crypto losses?

In Amicarelli v. The King, 2025 TCC 185 (see the firm’s case analysis), the Tax Court of Canada found that a taxpayer’s Bitcoin holdings, lost when the QuadrigaCX exchange collapsed in December 2017, were held on income account, not capital account, based on her profit-seeking intention, transaction frequency, and active market monitoring. The taxpayer had financed her Bitcoin purchases through a second mortgage, RRSP withdrawals, and high-interest credit cards, and successfully claimed a non-capital loss of roughly $505,142. The decision reinforces that the CRA and the courts look at actual conduct, not the label a taxpayer applies.

How does the CRA find out about unreported crypto activity before CARF reporting starts?

Even before CARF reaches full strength, the CRA has compelled disclosure of user data directly from crypto companies through the Unnamed Persons Requirement, a court-authorized tool used against a Canadian crypto company only twice to date: Coinsquare in 2020 and Dapper Labs in September 2025.

Should I file a voluntary disclosure if I am not sure whether my crypto activity is business income or a capital gain?

Yes. That uncertainty is common and is not a reason to delay. An experienced Canadian tax lawyer can review the trading pattern and financing history before filing to determine the more defensible characterization, which affects both the amount owing and the strength of the disclosure.

Do UK crypto tax rules affect Canadian residents with UK-based accounts?

Potentially. A Canadian resident with crypto held on a UK platform may have their activity reported to HMRC and, once an exchange relationship is activated, to the CRA under CARF. This does not change the Canadian resident’s existing obligation to report worldwide income, including crypto gains, on their Canadian tax return.

Published: January 15, 2026
Last Updated: August 17, 2026