The UK government should look out for dodgy directors hiding cash in crypto when their companies collapse, an insolvency expert has warned.
Failing to detect such crypto activity might lead the UK government to potentially “limitless” financial losses — especially as more businesses accept crypto.
Julie Palmer, managing director at insolvency firm Begbies Traynor, suggested the UK taxman could also be shortchanged by crypto-friendly companies storing income in virtual wallets, rather than their bank accounts.
Compared to offshore trusts (the traditional way to hide cash from tax agents), “we’ve got even less chance of actually tracing [crypto] and seeing the money that’s been taken out,” Palmer told the Guardian.
High Street yet to fully embrace crypto
In the UK, some independent businesses accept crypto. For example, driving lessons and cigars can both be bought with Bitcoin.
And while beauty brand Lush began taking crypto via its website in 2017, High Street is generally yet to catch up.
Not to mention, when Protos tried to buy a Lush bath bomb with Bitcoin, the option was absent (we reached for more information).
In any case, Palmer’s comments echo the sentiment of ‘British FBI’ deputy director Nigel Leary, who recently worried money launderers could wash illicit funds through luxury assets like condos.
Speaking specifically of insolvency, Palmer said bust businesses might want to obscure assets from administrators with crypto over paying creditors or tax bills.
Palmer posited that the insolvency industry can’t alone solve the problem that cryptocurrency poses.
“The potential [for losses] is limitless, depending on how popular this becomes,” said Palmer, adding the UK is a “year or two behind” the US when it comes to crypto laws and regulation.