Andersen Tax

Business

We provide significant support for businesses that operate in this space.

Help for crypto businesses & blockchain technology businesses

Businesses operating in the crypto space require accountants who not only expertly understand the sector, but who also are able to spot new opportunities for your company and help you exploit them based on your unique set of needs.

Our team is well-versed in all areas of blockchain technology and speaks the language at native level, meaning that you are in safe hands when transacting in the blockchain arena. From DApps to Airdrops, from minting to mining, ERC-721 to Bitcoin Ordinals, and from SAFTs to TGEs, we understand your business, and can help you every step of the way to achieve your goals as efficiently as possible.

As well as providing everyday accounting and compliance services, our team can assist with domestic and international structuring of your business. These bespoke products include accessing Enterprise Investment Scheme (EIS), identifying and applying for R&D tax credit opportunities, and assisting your company to build a framework for crypto remuneration of employees and service providers.

This advice includes helping you fully understand the tax environment in which you and your business operate in order to reduce financial risk and give you the optimum chance to succeed in the crypto environment. Our expertise mitigates the dearth of tax legislation available for the DeFi sector, a space which continues to spur vast inflows of funds from institutions and individuals alike.

Alongside basic accountancy services, such as accounts preparation and financial reporting, self-assessment and corporate tax returns, audit, VAT and company secretarial services, we also provide bespoke support to businesses by offering comprehensive solutions.

Employee Remuneration

Paying earnings in crypto as an employer means that an employee will be liable for income tax and National Insurance on the sums paid, however this will need to be declared by the employer in the usual way as if it is being paid in money. This is because crypto is generally considered as a readily convertible asset (RCA), but this may not always be the case.

Liabilities for National Insurance and income tax arise when certain criteria are met, and include transactions such as employee remuneration via crypto, as well as cryptoasset trading, mining, and – in rarer cases – Airdrops.

We can also advise on the reward of employees through a SAFT (Simple Agreement for Future Tokens) which can be used as an incentive for employees.

In short, we can help you understand the highly specific and detailed employment rules that employers must follow when remunerating employees with crypto. Based on the timings of events, the regulations have implications for both employers and employees or other recipients of such pay structures, be they options over tokens, the issuance of SAFTs, or basic token-issuance as a preferred method for salary payment.

Mining of Crypto

Taxation on the receipt of cryptoassets as rewards for mining depends on a variety of factors, including your level of activity, your level of organisation and the source of the crypto payment. These are some of the indicators as to whether your activities could be considered as a part of a trade or should be viewed under the capital gains regime.

Determination as to whether your activities are a trading activity can be complex and can be the difference between being charged to capital gains or as income tax.

We should also highlight that any cryptoassets received as a reward for mining and then kept and then disposed of at a later date can lead to further tax liabilities.

Careful tax planning is thus required to properly position yourself to minimise your tax liability. Given the complexity of tax law regarding mining transactions, specialist advice should be sought as soon as possible from crypto tax experts.

Airdrops

When made into your wallet in a personal rather than business capacity, Airdrops are not typically treated as income for income tax purposes. If, however, the Airdrop was made in return for a good or service (whether already performed or intended to be performed in future), it may be treated as liable to income tax. We can provide advice to clarify exactly how an Airdrop should be treated for tax purposes.

Staking

Staking (consensus Proof of Stake) is where tokens, such as ETH2, are provided to be used as part of a Proof of Stake consensus model. Where the staking activity does not qualify as amounting to a trade, the pound sterling value at the time of receipt of any tokens awarded will be taxable as income (miscellaneous income), with any appropriate expenses reducing the amount chargeable.

As with mining, any future disposal of the rewarded assets would then be liable to Capital Gains Tax.

Enterprise Investment Scheme (EIS) & Seed Enterprise Investment Scheme

EIS is an important source of funding for new, fast-growing businesses at the forefront of technology. We can help make sure you are ready for EIS investment, and that your company meets all criteria required to reach the EIS threshold.

Research & Development Tax Credits

Research and development tax reliefs support companies working on innovative projects in science and technology. In order to qualify for relief, there must be an advance in the overall field of operations (not just for your business), a scientific or technological uncertainty (i.e. a problem from the start without a known solution), and evidence of how the uncertainty was overcome.

For companies working with blockchain this could apply to:

New blockchain protocols
Development or advancement of software integrating with blockchain protocols
Development or improvement of DApps
Development of DAO structures
Smart contract development

And more!

There are two types of relief available to businesses. The Small and Medium-sized Enterprise (SME) relief scheme applies to businesses with less than 500 staff and a turnover of less than EUR100m or a balance sheet under EUR86m.

The Research and Development Expenditure Credit (RDEC) scheme is applicable to large businesses working on R&D projects. It is also available to SMEs who have been subcontracted to do R&D work for a large company.

From 1 April 2023, tax relief on eligible R&D expenditure for SMEs is 186% (i.e. a deduction of £18,600 for every £10,000 of eligible expenditure). Loss making companies can surrender losses for a cash repayment where the company remains a going concern. The repayment is equal to 10% of the loss arising from the R&D tax deduction on expenditure.

Video Game Tax Relief

From AAA games studios to web3 games studios, Video Games Tax Relief (VGTR) currently allows British games developers to claim a 20% tax rebate on expenditure relating to design, production and testing of a new video game. In order to qualify, the video game requires certification from the British Film Institute (BFI), and must spend at least 25% of core costs on goods or services provided from within the UK or European Economic Area (EEA).

From 1 April 2025, VGTR is being replaced by a refundable expenditure credit known as Video Games Expenditure Credit (VGEC). This change mimics the Government’s direction for research and development, driving domestic innovation. As a result, small companies operating remote working with overseas employees may find themselves disadvantaged.

The headline rate for VGEC is 34%, but taking into account the current rate of corporation tax used in the claims process the effective rate is closer to 25%.

Games already in development before 1 April 2025 can continue to claim VGTR until April 2027.

Management reporting, forecasting & budgeting

We work alongside our clients to turn their reported financial figures into something tangible and easy for management, current and potential investors and partners to understand, allowing us to assist in maximising the potential of any business, as well as enhance its reach in the wider business community.

Tax issues for insolvency

For tax purposes the story does not end after the shutters are pulled down as there are tax consequences for both the platforms and their customers. Just as cryptoassets create some unique challenges for taxation and legal advisors, bankruptcy is no different.

Entering into insolvency needs to be carefully considered as the Insolvency Service will investigate firms that enter into insolvency. Where they consider that there was unfit behaviour or misconduct by officers of the company, they may take further action against those individuals. Furthermore, schedule 13 of the Finance Act 2020 provides HMRC with the legal powers to hold officers of the company (such as directors or shadow directors) jointly and severally liable for tax debts. The aim of the legislation is to deter individuals from using insolvency as a way of getting out of paying their tax liability.

Don’t put your head in the sand!

To help you navigate the tremulous waters of insolvency contact us and we will be happy to assist.