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A Case Study on Optimizing Tax Liability for a Client
The client initially engaged our services with the sole purpose of submitting their tax return, as they were confident in their calculations of the amount owed to HMRC using a Crypto tax software. However, upon further examination, we identified significant data gaps and inaccuracies, which led to an inflated tax liability for the client, resulting in them paying substantially more taxes than necessary.
How we helped:
After thoroughly reviewing the client’s historical transactions, we uncovered the specific areas where inaccuracies were present, such as missing costs and purchases, which were significantly boosting their gains, adding further stress, as they lacked sufficient funds to cover these taxes. We successfully identified all the issues and proceeded to make the necessary corrections.
The primary cause behind these problems was their MetaMask wallet, which included numerous meme coins, causing the tax software to often miscalculate the figures accurately. We updated the transactions with the correct cost basis, reclassification, and accurate coding, resulting in a significant reduction in their gains. We carefully reconciled and rectified balances in the exchanges and wallets to ensure accurate balances. These transactions comprised of trading, staking, and airdrops.
Outcome:
The client expressed great satisfaction upon learning that we successfully rectified the balances, applied the correct tax treatment for different transactions, and ultimately achieved a tax reduction of over 25%. We are pleased to announce that we are continuing to provide ongoing support to the client for their current tax obligations.