Following a series of consultations, in June 2025 His Majesty's Revenue and Customs ("HMRC") published a policy paper titled 'Implementation of the Cryptoasset Reporting Framework'.1 The paper sets out the United Kingdom's ("UK") approach to implementing new rules on reporting information related to crypto-asset transactions. The rules mark a significant step in advancing tax transparency and compliance for crypto-assets.
Crypto-Asset Reporting Framework ("CARF"), introduced by the Organisation for Economic Co-operation and Development ("OECD"), establishes a framework under which reporting crypto-asset service providers ("RCASPs") must collect and report details on crypto-asset users and crypto-asset transactions to tax authorities. The data will be exchanged between tax authorities internationally to target local non-compliance.
The UK's decision to adopt CARF and extend the regime to domestic reporting marks a significant expansion of the UK revenue's ability to monitor crypto-asset activity. The UK regime will apply from 1 January 2026, with the first reports due by 31 May 2027 for the 2026 calendar year.
HMRC predicts the introduction of CARF will raise £350 million between 2026 and 2030.
The various consultations on CARF were covered in previous Brass Tax articles "", "Another Step Nearer for CARF in the UK", "Update: OECD Crypto-Asset Reporting Framework" and "UK Spearheads Global Commitment to the Crypto-Asset Reporting Framework".
What is a reportable entity under the UK CARF?
HMRC also has published further guidance outlining details on what qualifies as an RCASP, what is a crypto-asset and what counts as a UK-based entity.2
HMRC defines a crypto-asset as a "digital representation of value that uses a cryptographically secured distributed ledger to validate and secure transactions". Under the CARF regime, a crypto-asset is used for payment or investment purposes and is not a currency reportable under the Common Reporting Standard as either a Central Bank Digital Currency or a Specified Electronic Money Product.
The HMRC guidance states an entity will be considered an RCASP if it is involved in transacting crypto-assets on behalf of users or provides a means for users to transact crypto-assets. The broad definition covers exchanges, brokers, dealers and other service providers that conduct crypto-asset transactions on behalf of customers.
Under the UK rules an RCASP will need to report to HMRC if it is UK-based. The HMRC guidance outlines that an organisation is considered UK-based if it is tax-resident in the UK, incorporated in the UK, managed in the UK or has a regular place of business or branch in the UK. If an organisation is based in more than one jurisdiction that follows CARF rules they will need to report in only one country.
RCASPs will collect information relating to all individuals and entities for which they have provided services. The information will include the registered company name, address and the Company's registration number. Details relating to the crypto-asset transaction such as the value of the transaction and the type of crypto-asset also will be collected.
RCASPs in practice
Important factors businesses will need to consider are whether they qualify as an RCASP and whether they have the appropriate compliance structures in place. The requirement to register with HMRC, to carry out due diligence checks and to submit annual reports will represent a significant administrative burden on businesses. HMRC have estimated the administrative burden will cost close to a million pounds. One-off costs include IT infrastructure and purchasing or updating new software. Additional expenditure will be required for training and hiring staff to handle new data collection and processing requirements. Ongoing costs will include onboarding customers in line with Anti-Money Laundering requirements and annual packaging and submission to HMRC of reportable data collected and annual IT licensing costs.
A penalty charge of up to £300 per user could be imposed if a report is not submitted, is late, or is inaccurate, incomplete or unverified.
Concluding remarks
The UK's adoption of CARF marks a decisive step in increasing the international tax transparency of crypto-assets. The CARF framework brings with it material costs and governance challenges, particularly for smaller operators without existing reporting infrastructure. Relevant businesses should monitor further HMRC guidance.
As the first reporting deadline of 31 May 2027 approaches businesses and advisers will need to be prepared. CARF marks not just a compliance exercise but a fundamental shift in HMRC's visibility over crypto-assets.
Footnotes
1. Implementation of the Crypto-Asset Reporting Framework (CARF) - GOV.UK.
2. Check if you'll need to report crypto-asset data to HMRC - GOV.UK.
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