Will the tax authorities know about your crypto? The CARF and new exchange reporting explained

For years, many people treated crypto as a blind spot for the tax authorities. If you didn’t declare your gains, the thinking went, nobody would know. That assumption is ending. New international rules require crypto platforms to collect information about their users and send it to tax authorities, who can share it across borders.

This guide explains the Crypto-Asset Reporting Framework (CARF), the dates that matter in the UK and Canada, the separate US system, and what to do if you have gaps in your past returns.

What the CARF is

The CARF is an international standard developed by the OECD, published on 8 June 2023 together with an update to the Common Reporting Standard (CRS), the system tax authorities already use to exchange information about bank and financial accounts.

HMRC explains the reason plainly: the CRS doesn’t cover crypto transactions, so moving money into crypto risked undermining it. Under the CARF:

1. Crypto service providers, such as exchanges, must collect information about their users, including their tax residence, and carry out due diligence every year.
2. They report those users’ details and a summary of their transactions to their tax authority.
3. Tax authorities exchange the information on foreign residents with other countries that have implemented the CARF.

United Kingdom

The timeline

• The CARF rules took effect in the UK on 1 January 2026.
• Providers must submit their first report between 1 January and 31 May 2027, covering 1 January to 31 December 2026, and then by 31 May each year for the previous calendar year.
• HMRC says it will start receiving this data from 2027, with the first international exchanges in 2027.

UK residents are included

The international rules mainly target users who live in another country. The UK has gone further: HMRC’s guidance for providers says they must report on users who are tax resident in the UK or in another country that has signed up to the CARF. HMRC says the aim is to have CARF data on all UK taxpayers using UK-based providers, plus information on UK taxpayers from overseas providers through international exchange.

Penalties

For providers, HMRC can charge a penalty of up to £300 per user for not reporting, reporting late, or submitting inaccurate, incomplete or unverified reports. For users, HMRC’s manual says a person who deliberately fails to provide a valid self-certification can be liable to a penalty of up to £300.

What HMRC already knows

In August 2026, HMRC published its first official statistics on crypto gains, based on a dedicated crypto section of the Self Assessment return:

From 2027, HMRC will be able to compare what people declare with what platforms report. See UK crypto tax for how gains are calculated.

Canada

Canada is implementing the CARF too. The Department of Finance released draft legislation on 15 August 2025 for the Crypto-Asset Reporting Framework and changes to the Common Reporting Standard, with a deferred application date of 1 January 2027. Once in force, crypto platforms serving Canadian users will collect information under the new rules, and the CRA will exchange data with other participating countries.

The CRA already expects you to report crypto disposals and income, and to keep records. See Canada crypto tax.

United States

The US has its own domestic system. Crypto brokers that hold customers’ assets now report sales on Form 1099-DA: gross proceeds for transactions from 1 January 2025, and basis for certain transactions from 1 January 2026. See Form 1099-DA explained.

What exactly gets reported

HMRC’s manual sets out the two kinds of information platforms must report each calendar year.

About you (for an individual):

• name and address;
• country or countries of tax residence;
• tax identification number(s), such as a UK National Insurance number or UTR;
• date of birth.

About your activity, for each type of cryptoasset, as yearly totals:

For transfers, platforms report the number of units and their fair market value. Identical tokens are added together; each NFT counts as a separate type. Platforms don’t include the external wallet addresses in their reports, but HMRC’s manual says they must collect and keep them for at least five years, so tax authorities can ask for them later.

What your exchange will ask you for

Under the CARF, platforms must collect information about their users’ tax residence. In practice, expect a short self-certification form in your account asking which country or countries you’re tax resident in, and possibly for your tax identification number there. Your platform already holds your identity details from its standard checks.

Answer accurately, and update your platform if you move country. Be careful with requests that arrive by email or text with a link: fraudsters copy official-sounding requests. Log in to your exchange directly to check. See fake crypto apps and phishing.

If you haven’t declared crypto in the past

Coming forward yourself is generally better than waiting to be contacted.

UK: HMRC’s crypto disclosure service

HMRC has an online service to make a voluntary disclosure of unpaid tax on income or gains from cryptoassets, including exchange tokens, NFTs and utility tokens. According to HMRC:

• You work out what you owe, including interest, and submit the disclosure online.
• You must pay within 30 days of submitting it.
• Interest is charged daily from the date the tax was due. HMRC’s late payment rate is the Bank of England base rate plus 4%: 7.75% since 9 January 2026.
• How far back you need to go depends on your behavior: 4 years if you took reasonable care, 6 years if you were careless and 20 years if the underpayment was deliberate.

If the unpaid tax relates to the current or previous tax year, HMRC says to use your Self Assessment return instead.

Canada: the Voluntary Disclosures Program

The CRA’s Voluntary Disclosures Program grants relief on a case-by-case basis to taxpayers who come forward to fix errors or omissions in their tax filings. Under Information Circular IC00-1R7, for applications received from 1 October 2025:

• an unprompted application, made before the CRA has contacted you about the issue, can get 100% penalty relief and 75% interest relief;
• a prompted application, including one made after the CRA has received third-party information about possible non-compliance, gets up to 100% penalty relief but only 25% interest relief.

As CARF data starts to flow, coming forward early matters more. You apply with Form RC199. See how to report crypto on your Canadian tax return.

United States

If you’ve left crypto off past returns, a tax professional can advise you on amending them. The IRS says you must report digital asset transactions whether or not they result in a gain or loss.

The bottom line

Crypto is becoming as visible to tax authorities as a bank account. The simplest protection is the one that has always applied: keep good records and report every disposal and every piece of crypto income, wherever you hold it. Our guides on staking taxes, getting paid in crypto and tax-loss harvesting cover the most common situations.