UK Exchequer Pursues Power to Seize Bitcoin On Exchanges
The U.K. government is planning to introduce new regulations that would allow the HM Revenue & Customs (HMRC), the country’s tax, payments and customs authority, to seize cryptocurrencies—including Bitcoin—from companies that fail to pay their taxes. This move is part of the government’s efforts to modernize tax collection in the digital age.
According to a report by The Telegraph, the government is considering giving the HMRC access to online wallets as part of its strategy to modernize tax collection. The proposed rules would expand the Treasury’s authority to seize cryptocurrencies from companies that do not pay their taxes.
At present, the HMRC can only seize funds from bank accounts when people refuse to pay tax and fall under “direct debt recovery” authority. However, the agency is looking to expand this capability to include online payment accounts such as PayPal, and potentially companies’ digital asset wallets should the use of virtual currencies as a method of making online payments become more widespread.
The move to seize cryptocurrency from wallets could be seen as the next “crackdown” in a sector that has been accused of facilitating illegal behavior and money laundering. Cryptocurrencies like Bitcoin, which are not regulated by any central authority, have been promoted as a method for people to take back control of their finances outside of government control.
While cryptocurrency wallets that are controlled by people can only be accessed by the owner, those that are stored on centralized online exchanges like Coinbase, Binance, and Kraken could be subject to regulations. Law enforcement authorities currently have the ability to seize cryptocurrency from these exchanges and hold it as evidence when they find evidence of illegal conduct.
The HMRC spokesperson stated that the proposals “will help ensure that debt collection keeps up with business practices.” The proposed rules are subject to consultation and will support the government in carrying out analysis and additional commitments.
Recent statements made by the UK authority indicate that cryptocurrency and Bitcoin would be included in self-assessment tax returns, resulting in an estimated annual increase in capital gains tax of £10 million for gains that are not currently disclosed.
Ultimately, this move appears to be part of the government’s efforts to modernize tax collection in the digital age and ensure that debt collection keeps up with business practices. While the proposed rules are subject to consultation, recent statements by the UK authority suggest that cryptocurrency would be included in self-assessment tax returns.