Beautiful Virgin Islands

Saturday, Feb 22, 2025

Cryptocurrencies could lead to ‘limitless’ losses for UK government

Cryptocurrencies could lead to ‘limitless’ losses for UK government

Experts warn of danger of untraceable funds if companies accepting payments in cryptos go bust
The government could face “limitless” losses as a result of businesses that accept payments in untaxed and untraceable cryptocurrencies going bust, an insolvency expert has warned.

A growing number of companies, including the ethical cosmetics firm Lush and office-sharing firm WeWork, have begun taking payments for goods and services in cryptocurrencies such as bitcoin, alongside debit payments, credit or cash.

But while the shift has been welcomed by crypto-enthusiasts, experts said it could be an easy way for directors to hide cash from authorities, particularly when companies go bust.

Julie Palmer, a managing director at insolvency firm Begbies Traynor, said the growing popularity of cryptocurrency payments would make it harder for administrators – who are in charge of winding down a business after it fails – to track where money has come from, and whether owners, staff or directors are stripping funds out of the business illegally.

It means criminals could walk away with income that would usually be clawed back and distributed to creditors, including the tax collectors at HM Revenue and Customs and local authorities.

Palmer said that without new regulations and taxation plans, the government could face huge losses. “The potential is limitless, depending on how popular this becomes,” she warned.

It is the latest threat emerging from the rising popularity of cryptocurrencies, which have been linked to money laundering and black market dealings.

Criminals hoping to conceal wealth from tax collectors and administrators have traditionally had to go through the onerous process of setting up an investment vehicle, such as an offshore trust, to hide cash. In recent years, it has become easier for small businesses, tradespeople and criminals to accept payment in cryptocurrency by setting up “virtual wallets” online.

With trusts, “at least we could see the source of that money and where it’s gone”, Palmer said. But with cryptocurrencies, which are harder to trace, “we’ve got even less of a chance of actually tracing that and seeing the money that’s been taken out”.

Palmer said there was nothing the insolvency profession could do to tackle the issue on its own and believes UK authorities – who are a “year or two behind” the US on the issue – should take action and introduce laws to ensure crypto-assets are properly regulated and taxed. “It’s potentially a major loss of income tax revenue,” she said.

HMRC said it recently released a manual outlining the tax consequences of different types of crypto-asset transactions.

An HMRC spokesperson said: “We take action, including using powers provided by parliament to gather data from a range of information sources, to identify and investigate those that have failed to declare all their income and gains, ranging from individuals operating in the hidden economy, through to sophisticated organised crime groups and offshore structures used to hide earnings and other assets.”

The Treasury is reviewing evidence from a consultation on how to regulate crypto-assets.

The review is taking place at the same time as the Bank of England and the Treasury weigh up the possibility of digital assets being integrated into the UK’s monetary system, potentially via a Bank-issued asset sometimes dubbed “Britcoin”.

While the Bank has signalled that it is open to the idea, its chief economist Andy Haldane has dismissed as fanciful the idea that existing cryptocurrencies such as bitcoin could become a standard payments mechanism.
Newsletter

Related Articles

Beautiful Virgin Islands
0:00
0:00
Close
Good News: Senate Confirms Kash Patel as FBI Director
Officials from the U.S. and Hungary Engage in Talks on Economic Collaboration and Sanctions Strategy
James Bond Franchise Transitions to Amazon MGM Studios
Technology Giants Ramp Up Lobbying Initiatives Against Strict EU Regulations
Alibaba Exceeds Quarterly Projections Fueled by Growth in Cloud and AI
Tequila Sector Faces Surplus Crisis as Agave Prices Dive Sharply
Residents of Flintshire Mobile Home Park Grapple with Maintenance Issues and Uncertain Future
Ronan Keating Criticizes Irish Justice System Following Fatal Crash Involving His Brother
Gordon Ramsay's Lucky Cat Restaurant Faces Unprecedented Theft
Israeli Family Mourns Loss of Peace Advocate Oded Lifschitz as Body Returned from Gaza
Former UK Defense Chief Calls for Enhanced European Support for Ukraine
Pope Francis Admitted to Hospital in Rome Amid Rising Succession Speculation
Senate Republican Leader Mitch McConnell, at the age of 83, Declares His Retirement.
Whistleblower Reveals Whitehall’s Focus on Kabul Animal Airlift Amid Crisis
Politicians Who Deliberately Lie Could Face Removal from Office in Wales
Scottish Labour Faces Challenges Ahead of 2026 Holyrood Elections
Leftwing Activists Less Likely to Work with Political Rivals, Study Finds
Boris Johnson to Host 'An Evening with Boris Johnson' at Edinburgh's Usher Hall
Planned Change in British Citizenship Rules Faces First Legal Challenge
Northumberland Postal Worker Sentenced for Sexual Assaults During Deliveries
British Journalist Missing in Brazil for 11 Days
Tesco Fixes Website Glitch That Disrupted Online Grocery Orders
Amnesty International Critiques UK's Predictive Policing Practices
Burglar Jailed After Falling into Home-Made Trap in Blyth
Sellafield Nuclear Site Exits Special Measures for Physical Security Amid Ongoing Cybersecurity Concerns
Avian Influenza Impact on Seals in Norfolk: Four Deaths Confirmed
First Arrest Under Scotland's Abortion Clinic Buffer Zone Law Amidst International Controversy
Meghan Markle Rebrands Lifestyle Venture as 'As Ever' Ahead of Netflix Series Launch
Inter-Island Ferry Services Between Guernsey and Jersey Set to Expand
Significant Proportion of Cancer Patients in England and Wales Not Receiving Recommended Treatments
Final Consultation Launched for Vyrnwy Frankton Power Line Project
Drug Misuse Deaths in Scotland Rise by 12% in 2023
Failed £100 Million Cocaine Smuggling Operation in the Scottish Highlands
Central Cee Equals MOBO Awards Record; Bashy and Ayra Starr Among Top Honorees
EastEnders: Four Decades of Challenging Social Norms
Jonathan Bailey Channels 'Succession' in Bold Richard II Performance
Northern Ireland's First Astronaut Engages in Rigorous Spacewalk Training
Former Postman Sentenced for Series of Sexual Offences in Northumberland
Record Surge in Anti-Muslim Hate Crimes Across the UK in 2024
Omagh Bombing Inquiry Concludes Commemorative Hearings with Survivor Testimonies
UK Government Introduces 'Ronan's Law' to Combat Online Knife Sales to Minors
Metal Detectorists Unearth 15th-Century Coin Hoard in Scottish Borders
Woman Charged in 1978 Death of Five-Year-Old Girl in South London
Expanding Sinkhole in Godstone, Surrey, Forces Evacuations and Road Closures
Bangor University Announces Plans to Cut 200 Jobs Amid £15 Million Savings Target
British Journalist Charlotte Peet Reported Missing in Brazil
UK Inflation Rises to 3% in January Amid Higher Food Prices and School Fees
Starmer Defends Zelensky Amidst Trump's 'Dictator' Allegation
Zelensky Calls on World Leaders to Back Peace Efforts in Light of Strains with Trump
UK Prime minister, Mr. Keir Starmer, has stated that any peace agreement aimed at ending the conflict in Ukraine "MUST" include a US security guarantee to deter Russian aggression
×