The United Kingdom is cracking down on unpaid crypto taxes. Investors may not know that they owe the government money, but ignorance won’t work as an excuse, tax advisors told CoinDesk.
In fact, the government could employ several different tactics to track down who’s not paying taxes or hiding crypto holdings, David Lesperance, founder of tax advisory firm Lesperance and Associates, told CoinDesk in an interview.
On Wednesday, the country’s Treasury asked crypto investors to voluntarily calculate and disclose any unpaid income or capital gains taxes to avoid penalties or additional interest. Disclosure requirements apply to exchange tokens like bitcoin [BTC], non-fungible tokens (NFTs) and utility tokens.
Some investors may not have even read the guidance or realized that their NFT trades could constitute taxable events, Dion Seymour, crypto and digital asset technical director at tax firm Andersen, told CoinDesk in an interview.
But if crypto holders don’t figure out what taxes they owe and come forward voluntarily, it could make matters worse for them, David Lesperance, founder of tax advisory firm Lesperance and Associates, said during an interview with CoinDesk.
“[The Treasury] is going to say, okay, if you’re going to make us look for you, it’s gonna cost you,” Lesperance said.
Tracking unpaid tax
There are a number of ways that the government can find those who have not paid their crypto tax, Lesperance said. If an investor has money with collapsed crypto firms like FTX exchange or lending platform Celsius, then that investor could be “named as a creditor,” during bankruptcy proceedings, he said.
The Treasury can check if those funds are included in tax returns, Lesperance added. The government can also rely on whistleblowers who know you invest in crypto, he said.
However, the Treasury may need to invest in more resources and hire companies like Palantir to help with investigations, Lesperance added.
The U.K. was also among nations that recently welcomed new international norms for crypto tax…
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