Three years of unfiled returns, a crypto portfolio, and an ILR deadline
People rarely arrive with just a tax problem. They arrive with a tax problem that has become urgent because something else depends on it. This is one of those, and it is far more common than most people realise.
The version of this we hear most weeks
If you recognise yourself in more than one of these, you are not in unusual trouble. You are in ordinary trouble, and it is the kind that gets fixed.
"I have been in the UK for years and my tax returns quietly fell behind. At first it was one year. Now it is several and I do not know where to start."
"I traded crypto across a few exchanges. I never reported any of it, because I did not think I had to, or because I could not face working it out."
"My solicitor has asked me for my tax records and I do not have anything I could sensibly hand over."
"Penalty letters have started arriving from HMRC and I have stopped opening them, which I know is making it worse."
Years of filings outstanding, and a date that could not move
The client had been trading cryptocurrency across several exchanges and wallets over a number of years while their personal tax filings fell behind. Penalties had begun to accrue. Separately, their adviser needed an accurate and evidenced tax position by a fixed date.
Any one of those is manageable on its own. Together they remove the usual flexibility, because the work could not simply be done well. It had to be done well and finished by a date somebody else had set.
- Crypto records do not reconcile themselves. Every exchange exports in its own format and to its own standard. Moving coins between your own wallets looks identical to a disposal unless it is correctly identified. Old history is often restricted or gone.
- A multi-year catch-up compounds. Each year opens from the closing position of the year before, so the years cannot be worked independently or in the wrong order.
- Parts of the timeline are not ours to control. Registration, a Unique Taxpayer Reference arriving, agent authorisation being processed. Each sits at the front of the chain and moves at HMRC's pace, not ours.
- Two audiences, one file. Work prepared only to satisfy HMRC is not necessarily presented so a second reader can follow it quickly, and rebuilding it later costs time nobody had.
How the engagement was sequenced
With a fixed end date, the order of work matters as much as the work itself. Anything depending on a third party was started first, before anyone opened a spreadsheet.
Scope it and fix the fee before starting
One fixed fee agreed in writing covering every year, the penalty position and the evidence pack. On an engagement with a deadline, nobody wants a scope conversation halfway through.
Start the slow items on day one
Registrations, references and authorisations were begun immediately, because those timelines are outside our control and everything else waits behind them.
Rebuild the crypto position
Activity across exchanges and wallets pulled into a single reconciled position, year by year, with transfers between the client's own accounts correctly separated from genuine disposals.
Prepare and file the outstanding years
Returns prepared in sequence so each year opens from a closing position we can evidence, then filed together rather than drip fed.
Deal with the penalty position
Addressed inside the same engagement rather than left for the client to handle alone once the filings were in.
Assemble the evidence pack as we went
Filings, computations and supporting records organised into one bundle a non-specialist can follow without interpreting raw exchange data.
Filing it correctly and evidencing it are two different jobs
A return that is right is not automatically a return somebody else can verify. When a third party needs to satisfy themselves about a tax position, they are not reading the computation the way an accountant would. They are checking that the story is consistent, that the figures reconcile to something real, and that nothing sits unexplained.
So the pack was built around three things: the filings themselves, a clear reconciliation from source records through to the reported figures, and a plain explanation of anything that would otherwise raise a question. Built as you go it costs almost nothing extra. Reconstructed afterwards, under pressure, it is the worst week of the engagement.
How we work alongside your adviser
We are chartered accountants and we handle the tax. Your solicitor or adviser handles the application, advises on what it requires, and decides what evidence they want to submit. Our job is to make sure that when they ask for your tax position, it is accurate, filed, and set out clearly enough that they can use it straight away. That division works well, and clients who have both sides covered properly tend to have a much calmer time of it.
The honest status of this engagement
This work is live at the time of writing, with items still outstanding and the client's matter not yet concluded. We are not claiming a result, because there is not one yet.
We publish engagements in progress only where the method is worth showing on its own. If you want to know how this concluded, ask us on a call and we will tell you where it got to.
What people ask us before they commit
Yes, and that is a large part of what this kind of engagement is. We bring the outstanding returns up to date, deal with the penalty position, and assemble the filings and computations into a bundle your adviser can actually use, rather than a folder of raw records they have to interpret themselves.
We are chartered accountants, so we work on the tax. Questions about what any application needs, or whether your circumstances meet it, sit with your own solicitor or adviser, and we are very happy to work alongside them.
Usually not, but the timeline decides it rather than the complexity. Several parts of the process depend on HMRC rather than on us: registering for self assessment, a Unique Taxpayer Reference arriving, agent authorisation being processed. Those take as long as they take and they sit at the start of the chain.
That is why the first call matters. Tell us how many years are outstanding and what date you are working to, and we will tell you honestly whether it is achievable rather than taking the work and hoping.
Because the records almost never exist in a usable form. Each exchange exports in its own format and to its own standard. Moving coins between your own wallets can look identical to a disposal unless correctly identified. Exchanges you no longer use may have restricted access to old history.
Add several years and it compounds, because each tax year opens from the closing position of the one before. Reconstructing that is the bulk of the work in most crypto engagements. The tax calculation itself is usually the straightforward part once the position is established.
Penalties can be appealed where there is a reasonable excuse, and what qualifies depends entirely on the circumstances and the evidence available. It is not automatic, and nobody should promise you an outcome in advance.
What we will do is deal with the penalty position as part of the same engagement rather than filing the returns and leaving you to handle the correspondence separately. Those two things are much easier to resolve together than apart.
A return that is correct is not the same as a return somebody else can quickly verify. A reader who is not an accountant is checking that the story is consistent, that the figures reconcile to something real, and that nothing sits unexplained.
So the pack contains the filings, a clear reconciliation from source records through to the reported figures, and a plain English explanation of anything that would otherwise prompt a question.
The services behind this engagement
Cryptocurrency Tax
Reconciling exchange and wallet activity into a defensible position, then reporting it correctly. The record keeping is usually the hard part, not the tax.
Self Assessment and Personal Tax
Including multi-year catch-ups where filings have fallen behind, and the penalty position that usually comes with them.
Behind on filings, with a deadline you cannot move?
Book a free 15-minute call. Tell us how many years are outstanding and what date you are working to. We will tell you honestly whether it is achievable and what it would take. If it is not, we will say that too.