Experts from the insolvency firm Begbies Treynor, speaking to The Guardian, have warned of the risk to governments’ tax income from businesses that accepted cryptocurrencies for payment but later go bust. The inability to easily track cryptocurrency payments means that governments could miss out on huge sums of tax revenues.
Julie Palmer, a managing director at Begbies Treynor, said that cryptocurrency payments were especially hard to track when it came to winding down a business once it fails and therefore creditors who would usually receive some of their money back miss out and tax collectors, such as HM Revenue and Customs, don’t receive their cut which reduces the government’s ability to finance welfare and other activities dependent on public spending.
While the vast majority of companies do not yet accept cryptocurrencies for payments, the idea is gaining traction with firms like Tesla, WeWork and others accepting bitcoin. Palmer said that the potential losses to governments are “limitless depending on how popular” cryptocurrency payments become.
The insolvency firm told The Guardian that there’s nothing it or other insolvency firms could do to tackle the issue. In the case of the UK, the firm said that laws should be introduced to ensure cryptocurrencies are properly regulated and taxed.