The UK government is currently considering a proposal that would empower the tax authority to confiscate crypto assets from companies that fail to meet their tax obligations.
The UK government is actively reviewing a proposal to grant HMRC the necessary authorization to access hosted digital wallets.
A consultation paper published on April 27 highlighted the growing popularity of cryptocurrency wallets as the preferred payment method for goods and services, and discussed the potential impact of increased regulation of digital currencies.
The report states that if HMRC has the ability to collect debts directly from bank accounts, it should also have the ability to do the same with digital wallets.
This means that if someone owes taxes and they have funds in their digital wallet, the agency should be able to collect the owed taxes from there as well.
The proposal has been welcomed by those who believe it is necessary to crack down on tax evasion by companies that use cryptocurrencies to hide their assets.
They argue that digital currencies, especially those with strong privacy features, are gaining popularity among tax evaders, and that it is crucial that tax authorities have the power to confiscate such assets.
The proposal has also been criticized by some, who say it would violate individual privacy and property rights. They argue that digital assets should be treated no differently from physical assets and tax authorities have no right to confiscate them without due process.
In response to these concerns, the UK government said any proposals would be subject to consultation and all stakeholders would have the opportunity to express their views before any decisions are taken.
They also stressed that any proposal would need to strike a balance between fighting tax evasion and protecting individual rights and freedoms.