The UK’s HM Revenue and Customs ministerial agency has now updated its Statement of Assets form with a new section dedicated entirely to cryptocurrency declarations.
HMRC has always maintained the policy that people declare all their assets, no matter whether they are outside the traditionally recognised financial system. However, given the rise in prominence of cryptocurrencies, it has seen fit to now include a section that solely treats the declaration of this type of asset.
An HMRC spokesman said the following, taken from an article on the Mail Online released earlier today:
“The majority of individuals and businesses pay the tax that is due – however there remains a determined minority who refuse to play by the rules.
We take robust action to make sure that everyone pays the tax due – from individuals operating in the hidden economy through to action against sophisticated organised crime groups, and complex investigations into offshore structures used to hide earnings and other assets.”
HMRC let it be known that all details entered in declaration forms will be checked, and sometimes this entails a great deal of forensic work. Therefore, people need to be extremely careful when completing the forms, as they can be prosecuted if they don’t get them filled out correctly.
The new declaration form also targets “Black Market Pesos”. This is where drug cartels, principally from Mexico and Colombia, launder their drug money into US and European currencies, by way of Bitcoin.
According to accountancy firm UHY Hacker Young:
“Some assets like Black Market Pesos are almost exclusively used by organised crime but criminal proceeds flow through relatively mainstream assets like Bitcoin at a rate that some find alarming. For example, cybercriminals overseas take virtually all of their ransom payments in Bitcoin to avoid detection.”
UHY Hacker Young does fail to mention though that tracking Bitcoin transactions should be relatively easy for HMRC, given the resources at the department’s disposal. Bitcoin, as well as most other cryptocurrencies are based on blockchain technology, and therefore every transaction leaves an immutable track that can be traced back to reveal the wallets from where the transactions were made.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.