- British companies may find their cryptocurrency holdings seized if they don’t pay their taxes
- HMRC is seeking powers to confiscate the digital assets of companies that refuse to pay up
- The laws would only apply to funds held on centralized exchanges
The UK’s tax authority, HMRC, is contemplating new measures that would empower it to seize cryptocurrency belonging to companies that do not pay their taxes. This move is part of a broader plan to modernise the tax collection system for the digital era, which could include granting access to online wallets like Paypal. Currently, HMRC can only seize funds from bank accounts under “direct recovery of debts” powers, but this may be extended to include virtual currencies like Bitcoin, although non-custodial wallets won’t be affected.
HMRC Wants Extension of the Law
The current laws around the seizure of cryptocurrencies in the UK currently only apply to suspicion of criminal activity, but HMRC wants to extend this to include non-payment of tax. The reason for this isn’t because HMRC thinks that there are a plethora of businesses out there refusing to pay tax but hoarding crypto; moreover, the steps being taken by the UK government to regulate the crypto space means that cryptocurrency wallets may become a more popular method of payment in the future, and so it makes sense to align their policies.
However, the fluctuating value of cryptocurrencies makes it unclear how feasible this will be.
Laws Will Only Apply to Exchanges
While it is still uncertain exactly what assets will be confiscatable under the proposed powers, the Government expects to proceed with granting HMRC the authority to seize funds from digital wallets. A spokesperson for HMRC said that the proposals would help the agency keep up with the evolving business practices brought on by e-commerce, which makes it challenging to collect unpaid taxes using existing powers.
Britain has adopted a more welcoming tone regarding cryptocurrencies in recent years, and is clearly trying to close off some loopholes before a potential crypto boom in the region.