UK Government Plans Crypto Seizures On Tax Evaders — Are Your Coins Safe?

The U.K. tax authority HMRC is contemplating the implementation of regulations allowing the seizure of cryptocurrencies from businesses neglecting their tax obligations.

This proposal is part of a larger plan to modernize tax collection in the digital era.

Currently, HMRC possesses the authority to confiscate funds from bank accounts under "direct recovery of debts" powers.

The agency is exploring the possibility of extending these powers to digital payment platforms, such as PayPal, and potentially, business-owned cryptocurrency wallets, The Telegraph reported.

The consultation document released by HMRC addresses the potential for cryptocurrencies to become a widespread method for online transactions.

"If further regulation is brought in around digital currencies, it may be that cryptocurrency wallets may become a more popular method of paying for goods and services," the document stated.

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The document acknowledged the challenges in implementing such measures, citing the volatile nature of cryptocurrency value.

The U.K. government plans to empower HMRC to seize funds from digital wallets, though it remains uncertain whether this will include cryptocurrencies.

"The proposals will help ensure HMRC's debt collection keeps pace with business practices. E-commerce means new business practices with fewer physical and owned assets held in the U.K., which makes it harder for HMRC to collect unpaid taxes using existing powers," a spokesperson for HMRC said.

The spokesperson emphasized that all of HMRC's powers are balanced by safeguards to ensure the fair and consistent application of these powers.

Law enforcement agencies currently have the authority to seize cryptocurrencies from centralized online exchanges, such as Coinbase Global Inc., Binance and Kraken, in cases of criminal activity.

The HMRC has recently announced plans to include cryptocurrencies in self-assessment tax returns, which is expected to result in an additional £10 million per year in capital gains taxes on unreported profits.

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