As published on cityam.com, Thursday 29th April, 2021.
Government tax officials say they are not gearing up to crack down on people’s cryptocurrency assets, despite widely circulated rumours this week.
Officials at Her Majesty’s Revenue and Customs (HMRC) even branded claims from accountants UHY Hacker Young that a crackdown had begun as “scaremongering”.
UHY Hacker Young – one of the UK’s largest accountancy groups – yesterday announced that HMRC would begin to demand data on the holdings of cryptocurrencies from taxpayers it suspects of tax evasion and avoidance.
David Jones, one of the firm’s directors, said the tax office’s ‘statement of assets’ would now include explicit demands for information on cryptocurrency holdings.
However, bemused senior officials at HMRC said they were baffled by the claims of a ‘crackdown’.
A spokesman told City AM that a statement of assets form requires complete accounting of all of a taxpayer’s assets and it has always included cryptocurrency. New forms, they explained, simply list ‘crypto assets’ as an example of an asset that should be declared.
“The majority of individuals and businesses pay the tax that is due – however there remains a determined minority who refuse to play by the rules,” the spokesman said.
“We take robust action to make sure that everyone pays the tax due – from individuals operating in the hidden economy through to action against sophisticated organised crime groups, and complex investigations into offshore structures used to hide earnings and other assets.”
According to UHY Hacker Young, however, HMRC officers were keen to prevent hidden crypto assets from being taxed.
“HMRC suspects that an increasing amount of hidden wealth is slipping through its fingers thanks to the rise of cryptocurrencies and other unsanctioned money transfer systems,” said David Jones.
“This demand for information is an important step in HMRC’s fightback against that.
“While criminals can still choose to not declare these assets, doing so gives HMRC another opportunity to bring criminal charges against them if their forensic work finds a hidden Bitcoin wallet.”
Responding further, HMRC insisted Hacker Young had not found anything new, and maintained any form of a ‘crackdown’ on crypto assets would be heralded with plenty of advanced notice and information.
“But,” added the spokesman, “changing a form because more people might have crypto assets than five years ago for example doesn’t move the needle.”