Bitcoin joins Black Market Pesos and ‘Hundi’ on the tax official’s hit list: HMRC names cryptocurrencies among the alternative assets that MUST be declared in asset statements
- All assets, including Bitcoin, always had to be declared to the HMRC if required
- But HMRC has now updated the “Statement of Assets” form with things like crypto
- HMRC suspects that more “hidden wealth is slipping through their fingers,” says one expert
Since the rise in cryptocurrency assets, it has been necessary to report gains from such assets to the HMRC for tax purposes.
And anyone investigated by HM Revenue & Customs for suspected tax irregularities always had to declare all of their assets.
However, the HMRC is now going a step further and specifically adding a section on cryptocurrency declarations to their updated “Statement of Assets” form.
No hiding: HMRC can request that details of all assets held, including the cryptocurrency, be displayed
An HMRC spokesman said: “The majority of individuals and companies pay the tax due – but there remains a determined minority that refuse to obey the rules.
“We are taking tough measures to ensure everyone pays the taxes they owe – from people working in the hidden economy to action against sophisticated organized crime groups to complex investigations into offshore structures that are holding revenue and other assets be hidden. “
Helen Thornley, a technical assistant at the Association of Taxation Technicians, told This is Money that she thought it would make sense to explicitly include crypto assets in the “meaningful” form. She said it was important that people get a “prompt” to remember to declare all assets such as bitcoin.
Phras it: Crypotassets are now explicitly listed in the updated HMRC Asset Statement form, but such assets always had to be declared when required
HMRC stressed that the statement of assets form has always required that employees detail a full account of all assets around the world, regardless of how they are held. Now, however, crypto assets are listed clearly and explicitly, among other things, to ensure that no ambiguity can arise.
Other assets added to the updated registration form include e-money accounts, online payment platform accounts, electronic wallets, financial technology accounts, community and informal bank accounts, accounts associated with value transfer systems, money service business accounts and foreign exchange accounts, and electronic accounts.
Anyone required to provide details of their property to HMRC can expect whatever they deposit to be reviewed. Forensic work means that undeclared assets can also be tracked down. “People need to be really careful filling out such forms correctly as they could be prosecuted if they fail to do so,” tax expert Thornley told This is Money.
Growing popularity: Bitcoin has attracted a lot of interest from investors in recent years
The latest form updates contain specific references to, for example, black market pesos. According to accounting firm UHY Hacker Young, this is “a system commonly used by Mexican and Colombian drug cartels that convert the proceeds from drug sales in the US and Europe into local currencies without the money having to cross any border.”
The updated form also covers things like Hundi, which UHY Hacker Young says is an Indian system of credits that has existed since the 12th century and is still used by merchants and hawala, a similar money transfer system that common in the Middle East and the Middle East is Africa. ‘
Fei ch’ien, a trust-based money transfer system commonly used in China’s hidden financial system, is also explicitly listed.
David Jones, director at UHY Hacker Young, said, “HMRC suspects that with the rise of cryptocurrencies and other unapproved money transfer systems, more and more hidden wealth is slipping through its fingers. This need for information is an important step in HMRC’s fight against it.
‘The initiative goes hand in hand with the publication of the new Cryptoassets manual by the HMRC. Defense of ignorance of the law in this booming sector will no longer wash off with the tax officer.
‘Some assets like black market pesos are used almost exclusively by organized crime, but criminal revenues flow through relatively common assets like Bitcoin at a rate that some find alarming. For example, overseas cyber criminals take virtually all ransom payments in Bitcoin in order to avoid detection.
“While criminals can still choose not to declare these assets, this provides HMRC with yet another opportunity to file criminal charges against them if their forensic work finds a hidden Bitcoin wallet.”
“Criminal revenue is flowing through relatively common assets like Bitcoin at a rate that some find alarming,” said David Jones, director at UHY Hacker Young