HMRC updated its guidelines for compliance on the VAT treatment of cryptoassets on 21 October 2026, outlining VAT registration requirements, customer information obligations and rules for digital platforms.
The UK’s HM Revenue & Customs (HMRC) published Help with VAT treatment of cryptoassets, Guidelines for Compliance GfC21 on 15 October 2026 and updated the guidance on 21 October. The guidance explains how UK VAT rules apply to businesses involved in cryptoasset transactions, including the sale and exchange of tokens and the operation of digital platforms and marketplaces.
VAT treatment and registration
The guidance covers UK and overseas businesses whose cryptoasset activities may fall within the scope of UK VAT. HMRC states that VAT treatment depends on the underlying goods or services supplied rather than the description or classification of a cryptoasset.
For non-fungible tokens (NFTs), the VAT treatment generally follows that of the underlying asset. For example, an NFT representing digital art will usually receive the same VAT treatment as digital art, while an NFT representing a physical item will generally follow the VAT treatment applicable to that item.
Businesses must assess whether they are required to register for UK VAT. Certain exceptions may apply, including where all UK sales are zero-rated or where an overseas seller makes all UK sales to non-business customers through an online marketplace.
Reverse charge rules
The guidance explains when the reverse charge may apply to cryptoasset-related services. Under this procedure, the business customer, rather than the supplier, accounts for VAT.
The reverse charge may apply where the place of supply is the UK, the supplier belongs outside the UK, the customer is a relevant business person established in the UK, and the supply meets the applicable conditions, including the requirements concerning VAT registration and exemption.
Where the reverse charge applies, the supplier may not need to register for UK VAT. However, businesses that fail to register when required may be registered by HMRC and could face penalties.
Customer information and record keeping
HMRC emphasises that businesses must maintain complete and up-to-date records and collect sufficient customer information to determine the correct VAT treatment of their cryptoasset transactions.
Businesses need to establish their customers’ identities, locations and status as business or private customers. Blockchain transaction records alone may not provide all the information required for VAT purposes.
For cross-border supplies, businesses must also determine whether the transaction constitutes a business-to-business (B2B) or business-to-consumer (B2C) supply and whether the service qualifies as a digital service. These factors affect the place of supply and the jurisdiction in which VAT may be due.
For B2C supplies of digital services to customers in other jurisdictions, businesses must generally collect two pieces of evidence establishing where the customer normally lives, unless an applicable presumption simplifies the requirement.
Digital platforms and marketplaces
The guidance clarifies when digital platforms and marketplaces must account for VAT on cryptoasset transactions carried out by third-party sellers.
Platform operators are generally responsible for accounting for VAT on third-party electronically supplied services unless specific conditions are met. These include contractual arrangements identifying the supplier, invoices or sales receipts naming the supplier and service, and the platform not authorising the consumer’s charge or delivery or setting the general terms and conditions of the sale.
Where these conditions are not all satisfied, the platform may have to treat the third-party sales as its own supplies and account for any VAT due.
Businesses that only process payments are not regarded as digital platforms for these purposes and are not required to account for VAT on the underlying sale solely because they provide payment services. However, they may need to assist in establishing the customer’s location.
Correcting errors and seeking guidance
Businesses that identify errors in their VAT returns can follow HMRC’s guidance on correcting VAT errors and making adjustments or claims under VAT Notice 700/45. They should enter the reference GfC21 in the reason-for-error box when correcting a return under the guidance.
HMRC advises businesses that remain uncertain about their VAT position to consult the relevant legislation and guidance or use its Non-Statutory Clearance Service for advice on specific circumstances. Applications arising from the guidelines should include the reference ‘VAT Cryptoassets GfC21’.
The guidance also invites businesses to submit questions and feedback by email to [email protected].
