HMRC to hold Bitcoin under plans to seize crypto from tax dodgers
HMRC is considering rules that would enable it to seize cryptocurrency from businesses which fail to pay tax.
The Government is mulling proposals that would give the tax agency powers to access online wallets as part of plans to modernise how tax is collected.
HMRC is already able to seize funds from bank accounts when individuals fail to pay tax under “direct recovery of debts” powers, but could extend this to online payment accounts such as Paypal.
A consultation document raises the prospect that this could include the cryptocurrency wallets of businesses if virtual currencies become a common way of making payments online.
The prospect would be seen as the latest crackdown on the cryptocurrency sector, which has been accused of allowing money laundering and criminal activity. Cryptocurrencies such as Bitcoin have been touted as ways to give owners control of their finances outside of government control.
While cryptocurrency wallets operated by individuals can only be accessed by the owner, those at centralised online exchanges such as Coinbase, Binance and Kraken could be subject to the rules. Law enforcement agencies are currently able to seize cryptocurrencies from these exchanges when they detect criminal activity.
The Government said it expected to proceed and give HMRC powers to seize funds from digital wallets, although it is unclear if this will extend to cryptocurrencies.
HMRC said: “The proposals will help ensure HMRC’S debt collection keeps pace with business practices. E-commerce means new business practices with fewer physical and owned assets held in the UK, which makes it harder for HMRC to collect unpaid taxes using existing powers.
“All of HMRC’S powers are balanced by safeguards, which should reassure taxpayers that powers are exercised proportionately and consistently.”
HMRC said recently that cryptocurrencies would be added to self-assessment tax returns, which forecasters estimate could raise £10m a year in capital gains taxes on profits that are not currently reported.