Her Majesty's Revenue And Customs Seizes Three NFTs And £5,000 Worth Of Crypto Assets In A Tax Fraud Scheme
Her Majesty’s Revenue and Customs, more commonly known as HMRC, is the department within the UK Government which is responsible for the collection of taxes, payment of various forms of state support, the administration of other regulatory regimes has seized three non-fungible tokens (NFTs) during an investigation into a suspected value added tax repayment scheme involving a net of 250 allegedly fake companies.
By Andrew Senior
February 15th, 2022
In addition to the NFTs seized, which are still being appraised, HMRC has also detained approximately £5,000 worth of various crypto assets.
Value added tax, or VAT, is the tax consumers are responsible for when purchasing goods or services. The standard rate of VAT in the UK is 20%, with roughly half the items households spend money on subject to this rate. There is a reduced rate of 5% which applies to some things like children’s car seats and home energy.
HMRC has arrested three people on suspicion of attempting to defraud £1.4m, the suspects employed sophisticated methods to hide their identities such as creating false identities and addresses while using virtual private networks (VPNs) to carry out their fraudulent activities. HMRC said this represents the first example of a UK law enforcement agency seizing an NFT.
Nick Sharp, deputy director of economic crime at HMRC, said,
“Our first seizure of a non-fungible token serves as a warning to anyone who thinks they can use crypto assets to hide money from HMRC. We constantly adapt to new technology to ensure we keep pace with how criminals and evaders look to conceal their assets.”
Since being first popularized in 2014, NFTs have exploded in demand and valuations, often attracting enormous sums of digital assets, increasingly attracting the attention of UK regulators over the past two years.
Josh Sadhu, co-founder of NFT advisory company Quantus based in London, recently sounded alarm bells regarding NFTs, saying that the asset class is “largely unregulated” adding that NFTs don’t fall under any existing anti-money laundering checks for art. Sadhu went to say,
“What that has allowed is for those who take advantage of these systems and scammers alike, or those who launder money another option and one that is perhaps seen to be more anonymous and therefore secure. There’s going to be a bit of a battle between DeFi and centralized finance but in the end, what people are going to trust the most and what is going to get the stamp of approval by state regulators are marketplaces along with exchanges where you need to provide KYC documentation.”
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