The UK national taxing authority, HM Revenue and Customs (HMRC), has released a statement urging crypto users to disclose any unpaid taxes to avoid hefty fines. Failure to comply with this request can result in additional penalties for users.
The Importance of Voluntary Disclosure
HMRC highlights the significance of making a voluntary disclosure to the tax authorities. Before doing so, users must undertake a few essential steps. Firstly, it is crucial to gather all relevant information related to cryptoassets on which taxes are owed. This includes personal details like name, address, email address, contact telephone number, and National Insurance number.
Furthermore, users need to compile data on the number of cryptoasset transactions, undisclosed proceeds or income, and the number of years for which unpaid taxes need to be disclosed. The number of years depends on the circumstances surrounding an individual’s previous tax compliance. If reasonable care was taken but the correct amount was not paid, disclosure is only necessary for the past four years. However, if insufficient care was exercised, HMRC requires users to address unpaid taxes for up to six 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 Initiatives for Crypto Regulation
The UK government has actively implemented policies regarding artificial intelligence, financial technology, and the metaverse, employing regulatory measures, enforcement actions, and investigations. The Financial Conduct Authority (FCA) introduced new rules for digital assets that necessitate crypto firms to register with the financial regulator and have their marketing materials approved by an FCA-authorized firm.
Some key updates include exchanges explicitly warning customers about the risks associated with crypto investments, ensuring marketing materials are fair, transparent, and not misleading, and requiring a 24-hour cooling-off period for new customers. The recent appointment of Bim Afolami as the economic secretary to the Treasury of the United Kingdom further emphasizes the government’s focus on digital asset adoption and central bank digital currencies.
Amidst these developments, the new minister for the City of London has called for regulators to adopt a more accommodating approach to encourage risk-taking and stimulate the country’s stagnant economy. Balancing effective oversight with room for innovation and growth is seen as necessary for the revitalization of the UK’s financial landscape.
“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.
