The amount of tax potentially underpaid by cryptocurrency investors tripled between 2020 and 2021, according to data from HMRC.
The taxman has identified £428,000 in “tax under consideration” on cryptocurrency investments in the year to March 31, according to a report published by HMRC last week (November 4).
This is in comparison with the £142,000 it identified in 2020.
Tax under consideration is the taxman's initial estimate of how much tax may be at stake, not the final tax bill for any tax unpaid.
Steven Porter, partner at Pinsent Masons said he expects these figures to increase as HMRC actively looks for wealthy individuals evading tax.
“HMRC’s ability to gather information on crypto holdings is seemingly still at an early stage but will no doubt increase, given the popularity of these assets,” he said.
“It seems likely that the next step will see HMRC increase international cooperation with overseas tax authorities to get more data from overseas cryptocurrency exchanges and brokers.”
A spokesperson from HMRC said: "We continue to develop our capabilities to better identify cryptoassets tax risks - and that work continues to improve through staff upskilling and better categorisation of related tax risks.
“Tax under consideration is not tax owed or unpaid. It is an estimate of the amount at stake in an enquiry and is used by HMRC to manage the deployment of resources based on risks to revenues."
The amount of tax potentially underpaid through capital gains tax also rose to £752m in 2021 from £293m a year before.
The figure for IHT also nudged up, rising to £353m this year from £247m last year.
HMRC said: "The number of enquiry cases and amount of tax we bring in each year changes as cases are opened and closed, and when any tax owed is paid. This means it is difficult to draw comparisons between financial years.
"Inheritance Tax (IHT) tax under consideration figures will include cases opened in previous years. And due to the nature of IHT, tax under consideration showing in 2020/21 will include figures from cases opened prior to the 2020/21 tax year."
Last month HMRC confirmed it will begin to send ‘nudge’ letters to holders of crypto assets to remind them to pay the correct tax.
The letters are being sent out to encourage investors to ensure they have paid the correct amount of income and capital gains tax on any income they have received from their crypto asset holdings.
A spokesperson for HMRC said it wants to help people to get their tax affairs right and to educate those who might need help.