The UK taxman has offered investors the opportunity to report any unpaid gains from taxable events related to cryptocurrencies and NFTs. Experts advise defaulters to inquire due to the complex nature of taxable events over several years of cryptocurrency transactions. The British government is lowering corporate and individual taxes, but appears to be tightening the screws on cryptocurrency evaders following a statement made in May.
The UK tax authority has started a new voluntary reporting process for those with undeclared cryptocurrency earnings. HM Revenue and Customs wants the public to report profits from cryptocurrency exchange tokens, non-fungible tokens (NFTs), following a recent move to clamp down on corporation tax evaders.
This follows a previous program to disclose non-crypto taxes in the UK, whose government previously estimated that between 55% and 95% of crypto holders could be breaking tax laws.
British Treasury: Cryptocurrency Taxpayers Should Take Advice
Some advisors say taxpayers should seek advice before using the reporting mechanism. They should get an expert opinion due to the complex nature of crypto taxes and the fact that there can be several years of non-payment. Crypto holders, for example, may not be clear about what activities with cryptoassets caused profits.
Daniel Howitt, director of Recap, a crypto tax software provider, said cryptocurrency investors could use this opportunity to understand their obligations before the tax authority can access better data.
Richard Jones, senior policy technical director at the ICAEW, said the asset class fast progress has seen regulators playing catch-up.
British Treasury Targets Crypto Evaders Despite Tax Cuts
British Prime Minister Rishi Sunak recently instituted a series of tax cuts to encourage investment in the United Kingdom. Individuals could also see a substantial cut, returning around $570 to their bank accounts each month, Sunak told Bloomberg’s Francine Lacqua in a recent interview.
At the same time, however, the Government is trying to clamp down on evasion, especially in the area of crypto taxes. In May, the Government studied the possibility of giving the Tax Agency powers to confiscate digital assets from the wallets of tax evaders. He said he would talk to wallet providers about how to accomplish this.
The Government has also recently announced that it will require customer information from cryptocurrency exchanges starting in 2027. These records will give the government more information about cryptocurrency spending habits, as long as its requests are within the limits of the law.
Role of the OECD in Fighting Cryptocurrency Tax Evasion
The Crypto Asset Reporting Framework (CARF), the OECD’s latest flagship tax transparency standard, will require crypto platforms to start sharing taxpayer information with tax authorities, which they currently do not do, ensuring that these authorities can exchange information to enforce tax compliance.
This milestone follows the 2021 two-pillar global tax deal, which seeks to ensure companies pay the right taxes where they operate and combats tax avoidance by large multinational companies through a global minimum rate of 15%.
“I am proud that the UK is once again demonstrating leadership in the fight against global tax evasion, helping to secure essential revenue for the public services we all use. Today we are sending a strong message that we will not allow criminals to use crypto to avoid paying their fair share,” British Treasury Secretary Victoria Atkins said in a statement, also praising international cooperation to close the gap in the global tax system and potentially recover hundreds of millions of pounds in lost revenue.
By Leonardo Perez
