Tax Crackdown: UK Authorities Target Crypto Users for Unpaid Taxes

The UK national taxing authority has asked crypto users to disclose any unpaid taxes they might have in order to avoid fines. 

In a Wednesday announcement, HM Revenue and Customs (HMRC) asked crypto users to make a “voluntary disclosure of any unpaid tax” relating to income or gains from cryptoassets, including exchange tokens, NFTs, and utility tokens.

The government agency warned that users who fail to pay their taxes would face additional penalties. 

“If you do not contact us to declare your unpaid tax, you could be liable to additional interest and penalties.”

The HMRC said before considering making a voluntary disclosure to the tax authorities, there are several key steps you need to take.First, it is crucial to collect all the necessary information regarding the cryptoassets on which users owe taxes, including personal details such as your name, address, email address, and contact telephone number, as well as National Insurance number. Additionally, users need to gather data on the number of cryptoasset transactions, the proceeds or income that they have not declared, and the number of years for which they need to disclose unpaid taxes.The agency said the number of years users need to disclose depends on the circumstances surrounding their previous tax compliance. If they can demonstrate that they took reasonable care but still failed to pay the correct amount, they will only need to address unpaid taxes for the past four years. “If you did not pay enough because you did not take enough care, you must pay HMRC what you owe for a maximum of 6 years,” the agency said.

UK Government Pushes for More Regulations

The UK government has been actively addressing policies related to artificial intelligence, financial technology, and the metaverse through regulatory measures, enforcement actions, and investigations. Back in October, the Financial Conduct Authority (FCA) implemented some new rules pertaining to digital assets, which require crypto firms to register with the financial regulator and have their marketing materials approved by an FCA-authorized firm.Key updates include exchanges providing clear warnings to customers about the risks associated with crypto investments. Marketing materials must be fair, transparent, and not misleading. Additionally, a 24-hour cooling-off period for new customers is required.Earlier this month, Bim Afolami was appointed as the economic secretary to the Treasury of the United Kingdom, where he has authority over policies that impact the adoption of digital assets and central bank digital currencies within the country.More recently, the new minister for the City of London called on regulators to adopt a more accommodating approach towards risk-taking in a bid to revitalize the UK’s stagnating economy.He emphasized the need for regulators to strike a balance between effective oversight and allowing room for innovation and growth.“There’s no point having the safest graveyard. Animal spirits need to be there, we need to innovate, we need to drive growth and initiative,” he said.