-
The
U.K.
on
Wednesday
published
notices
encouraging
crypto
users
to
voluntarily
report
unpaid
taxes
to
avoid
penalties. -
A
2022
government
survey
showed
72%
of
crypto
owners
in
the
U.K.
had
not
read
its
crypto
tax
guidance,
but
ignorance
won’t
count
as
an
excuse
for
tax
evasion,
experts
told
CoinDesk. -
Regulators
can
use
a
number
of
tactics,
including
whistleblowers
and
creditor
lists
from
recent
bankruptcies
to
track
undeclared
crypto,
tax
advisors
say.
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
data
sharing
between
authorities
developed
by
the
Organization
for
Economic
Cooperation
and
Development
(OECD).
“This
means
a
lot
more
information
going
to
the
Treasury
than
people
previously
would
have
expected,”
Seymour
said.
Calculating
unpaid
tax
If
investors
took
“reasonable
care”
when
declaring
their
taxes,
they
may
have
to
pay
what
is
owed
in
unpaid
taxes
to
the
government
for
a
maximum
of
three
years
preceding
the
current
tax
year,
the
government
said.
“If
you
took
reasonable
care,
you
read
the
guidance
and
you
misunderstood
it,
but
then
you
asked
a
tax
consultant
about
it,”
Seymour
explained.
If
investors
didn’t
make
an
effort
to
get
their
taxes
right,
then
they
might
have
to
pay
up
for
a
maximum
of
6
years.
Those
who
deliberately
evaded
taxes
–
knowing
that
they
should
have
paid
them
–
or
deliberately
reported
wrong
figures,
could
pay
a
maximum
of
20
years
worth
of
tax
on
their
crypto.
Not
contacting
the
Treasury
could
mean
additional
interest
and
penalties,
the
government
said,
but
they
can
be
minimized
if
any
errors
are
reported.
The
government
can
slap
investors
with
penalties
between
30%
and
100%
of
the
extra
tax
due
for
deliberately
concealing
crypto
holdings
from
the
government.
Ignorance
is
not
bliss
People
may
not
know
how
much
crypto
tax
they
owe,
Seymour
said.
A
2022
government
survey
showed
that
about
72%
of
former
and
current
crypto
owners
had
not
seen
the
Treasury’s
crypto
tax
guidance.
On
top
of
that,
“the
taxation
of
crypto
isn’t
necessarily
as
straightforward
or
intuitive
as
some
people
may
like,”
Seymour
said.
People
may
not
always
realize
they
are
creating
taxable
events,
Seymour
added.
For
example,
purchasing
an
NFT
using
crypto
like
ether
(ETH)
can
be
a
taxable
event,
he
said.
Purchasing
crypto
using
other
crypto
could
also
be
a
taxable
event.
“If
investors
have
actually
used
software
or
they’ve
kept
on
top
of
it
as
they’ve
gone
through
the
process
then
it
won’t
necessarily
be
too
bad,
but
if
they
haven’t,
then
it
can
actually
be
quite
a
difficult
process
for
them
to
calculate
everything,”
Seymour
said.