Her Majesty's Revenue and Customs (HMRC), the UK tax authority, has recently seized three non-fungible tokens (NFTs) alleged to be part of a suspected £1.4 million tax fraud. The seizures are a part of a VAT fraud involving about 250 fake companies.
According to a recent BBC report, the tax regulator has arrested three suspects who are believed to be involved in the fraudulent scheme. The HMRC noted that these suspects had utilized "sophisticated methods" to carry out their crimes.
The suspects had allegedly created false identities, fake addresses, prepaid unregistered mobile phone numbers, invoices, and virtual private networks (VPNs) to mislead the tax authority into believing they were engaging in a legitimate enterprise.
However, their disguise did not last long as the HMRC soon saw behind their cover and hunted them down, seizing crypto assets worth about £5,000 and three digital artwork NFTs.
HMRC Issues Stern Warning to Tax Offenders
This latest seizure by the HMRC marks the first time UK regulators have confiscated NFTs. The rapidly growing asset class is clearly drawing the attention of regulators as its popularity continues to expand.
The HMRC used this opportunity to warn investors who are trying to hide taxable income via crypto assets, like NFTs. Nick Sharp, deputy director for economic crime at HMRC said that the seizure "serves as a warning to anyone who thinks they can use crypto assets to hide money from HMRC".
He added, "We constantly adapt to new technology to ensure we keep pace with how criminals and evaders look to conceal their assets."
Earlier in November, the HMRC had imposed a 2% tax on cryptocurrency exchanges, adding that cryptocurrencies do not qualify as financial instruments, therefore, platforms issuing them are not eligible for financial exemptions.
FCA Employs Crypto Talents to Combat Crime
As bad players in the crypto space continue to discover new ways to defraud unsuspecting investors using crypto, regulators are moving to stop their activities.
The UK's Financial Crimes Authority (FCA) had earlier announced plans to employ crypto experts to train its staff on how to spot illicit transactions on the blockchsin. This training will help the FCA to tackle rising cases of money laundering and terrorist financing using crypto.