24/02/22

UK: Taxman issues warning to crypto criminals.

As published on cityam.com, Thursday 24 February, 2022.

The UK’s tax authority has said criminals should be “worried” by its capabilities when it comes to combatting crypto fraud and tax evasion.

Last week HMRC flexed its muscles with the revelation that it has seized three NFTs and opened 20 investigations into suspected crypto asset fraud cases in order to crack down on tax evasion.

Speaking at Chainalysis’ Links conference in London today Simon York, HMRC’s director and chief investigation officer, warned criminals about the sophistication of the authority’s investigations.

“If you’re a criminal,you should be worried,” said York, who heads up a team of 5,000 investigators including tax specialists, cyber experts and forensic accountants.

HMRC is part of an information sharing system with international tax authorities known as the J5. According to York, HMRC and the US’ Internal Revenue Service (IRS) have developed highly sophisticated data matching systems.

“When you’re filling out tax documentation, we know half the answers already,” revealed York. “It’s difficult to dodge us.”

York said that he hopes that enforcement actions against crypto crimes will help “build trust” in blockchain.

“We want to build with the taxpayers of UK,” said York. “We’re working with the private sector, to help build trust in the blockchain. We see ourselves as part of that wider ecosystem in terms of developing this new sector.”

In addition to bulking up enforcement actions HMRC has also expanded the scope of crypto taxation, recently publishing new rules for decentralized finance (DeFi). The new tax guidelines received pushback from the UK’s crypto industry over concerns they will worsen the headache of complex digital asset tax returns for investors.