HMRC to crack down on crypto assets of tax evaders
The recent surge in interest and value of cryptocurrencies will likely lead to increased scrutiny of its links to organized crime, according to a major accounting firm.
The organized crime ecosystem is becoming increasingly digital and there are now fears that it is being used by tax evaders.
HMRC is set to demand data on cryptocurrency holdings from taxpayers suspected of tax evasion and advice, accounting firm UHY Hacker Young said.
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The tax administration would include explicit requests for information on cryptocurrencies and other assets used by organized crime in its “statement of assets” form.
Major Bitcoin and Ethereum currencies and assets in e-money wallets such as Paypal will be in the spotlight. Other controversial assets include assets in “value transfer” systems such as black market pesos, typically used by Mexican and Colombian cartels, and Chinese Fei ch’ien.
“Some assets like black market pesos are used almost exclusively by organized crime, but the proceeds of crime are flowing through relatively common assets like Bitcoin at a rate that some find alarming. For example, cybercriminals overseas take virtually all of their Bitcoin ransom payments to avoid detection, ”said David Jones, director of UHY Hacker Young.
“While criminals can always choose not to report these assets, it gives HMRC another opportunity to lay criminal charges against them if their forensic work finds a hidden Bitcoin wallet,” he added.
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The move indicates that HMRC is increasingly concerned that crypto assets used by tax evaders are slipping the net. “This request for information is an important step in HMRC’s response to this,” Jones said.
This comes just a month after the release of HMRC’s new Cryptoassets Handbook, which states that individuals are required to pay income tax and National Insurance contributions on the cryptoassets they receive. from their employers in the form of a non-cash payment.
HMRC has been contacted for comment.