{"id":22234,"date":"2022-12-21T14:51:59","date_gmt":"2022-12-21T14:51:59","guid":{"rendered":"https:\/\/taxfix.com\/en-uk\/?p=22234"},"modified":"2025-09-17T15:54:34","modified_gmt":"2025-09-17T14:54:34","slug":"hmrc-seizes-nfts-a-saga","status":"publish","type":"post","link":"https:\/\/taxfix.com\/en-uk\/blog\/hmrc-seizes-nfts-a-saga\/","title":{"rendered":"HMRC seizes NFTs: a saga"},"content":{"rendered":"\n<p>Remember that time HMRC seized NFTs? Yep that\u2019s right! Back in February 2022, HMRC took hold of three NFTs which were involved in a massive <a href=\"https:\/\/www.bbc.co.uk\/news\/business-60369879\" target=\"_blank\" rel=\"noreferrer noopener\">\u00a31.4million VAT fraud scheme<\/a>. Let\u2019s have a look at what went down. \ud83d\udc47<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">First of all, what are NFTs?<\/h2>\n\n\n\n<p><a href=\"https:\/\/taxfix.com\/en-uk\/blog\/what-is-nft-art-and-how-is-it-taxed\/\" target=\"_blank\" rel=\"noreferrer noopener\">NFT<\/a> stands for non-fungible tokens. They\u2019re unique (a.k.a non-fungible) digital tokens that are recorded via blockchain to verify authenticity and ownership\u2026&nbsp;<\/p>\n\n\n\n<p>Sorry, let\u2019s try that again in English. NFTs are digital assets. They can\u2019t be copied and they\u2019re created in a very similar way to <a href=\"https:\/\/taxfix.com\/en-uk\/glossary\/cryptocurrency\/\" target=\"_blank\" rel=\"noreferrer noopener\">crypto<\/a>. Some of the most popular NFTs represent real-world items &#8211; such as artwork, celebrities\u2019 limbs, limited edition trainers etc. &#8211; but in digital form.<\/p>\n\n\n\n<p>So think crypto coins, but not quite. Same same but different.\u00a0<\/p>\n\n\n\n<figure class=\"wp-block-embed is-type-video is-provider-youtube wp-block-embed-youtube wp-embed-aspect-16-9 wp-has-aspect-ratio\"><div class=\"wp-block-embed__wrapper\">\n<div class=\"embed-container\"><iframe loading=\"lazy\" title=\"Tax in 10(ish) seconds - how does cryptocurrency work?\" width=\"500\" height=\"281\" src=\"https:\/\/www.youtube.com\/embed\/oZe9mWL1gqE?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen><\/iframe><\/div>\n<\/div><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\">Are NFTs regulated in the UK?<\/h2>\n\n\n\n<p>NFTs aren\u2019t regulated in the UK. This means there are no set rules or guidelines the creator of an NFT has to follow.&nbsp;<\/p>\n\n\n\n<p>Because NFTs aren\u2019t regulated, creators, investors or traders of the digital artwork also have little to no protection if something goes wrong.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">So why did HMRC seize NFTs?<\/h2>\n\n\n\n<p>Long story short, a group of three tried to pull a fast one on HMRC. And it\u2019s safe to say that HMRC didn&#8217;t have a bar of it.<\/p>\n\n\n\n<p>\ud83d\udc49 Here\u2019s what happened:<\/p>\n\n\n\n<p>Using a mixture of stolen and false identities, the trio created 250 fake businesses. We\u2019re talking prepaid unregistered mobiles, false invoices and \u2018fake business activity\u2019. Yes, they <em>really<\/em> pulled out all the stops.&nbsp;<\/p>\n\n\n\n<p>Turns out, all of this was so that they could claim back millions of pounds in VAT. \ud83e\udd2f<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">What\u2019s VAT and why did they want to claim it back?<\/h2>\n\n\n\n<p><a href=\"https:\/\/taxfix.com\/en-uk\/glossary\/vat\/\" target=\"_blank\" rel=\"noreferrer noopener\">VAT<\/a> (Value Added Tax) is a tax that is added to most goods and services in the UK. There are three rates of VAT but the standard rate is 20%.&nbsp;<\/p>\n\n\n\n<p>Businesses that are registered for VAT can claim the tax back for purchases used for work.&nbsp;<\/p>\n\n\n\n<p>So if you have 250 \u2018businesses\u2019, and you have all these falsified documents making it look like all 250 businesses qualify for a VAT refund, then you\u2019re looking at a pretty huge refund from HMRC.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Where do the NFTs come into this?<\/h2>\n\n\n\n<p>Oh yes. Well HMRC are yet to confirm how or why the NFTs were involved but here\u2019s what we heard on the grapevine\u2026<\/p>\n\n\n\n<p>Some reports suggest that the trio had used their ill-gotten gains from the VAT refund to purchase three digital artwork NFTs.&nbsp;<\/p>\n\n\n\n<p>In this case, they would have assumed that purchasing NFTs instead of depositing a bank cheque would guarantee their dodgy funds would not be recoverable. After all, NFTs aren\u2019t regulated, but GBP and banks are.<\/p>\n\n\n\n<p>Other reports suggest a process known as \u2018wash trading\u2019 was <em>also<\/em> being carried out. This is one way of increasing the value of your NFT. Except it\u2019s artificial and illegal.<\/p>\n\n\n<\/div> <!-- .c-body -->\n\n<div class=\"b-highlight-mini m-nude m-align-center\">\n    <div class=\"b-block-body\">\n        <h3 style=\"text-align: left;\">Wash trading<\/h3>\n<p style=\"text-align: left;\">Continuously buying and selling an NFT you own, but using different accounts. So the buyer is <em>also<\/em> the seller. This process boosts the demand of the NFT, which is usually followed by an increase in price.<\/p>\n\n    <\/div>\n<\/div> <!-- .b-highlight-mini -->\n\n<div class=\"c-body\">\n\n\n\n\n<p>Nevertheless, whatever they chose to do with the NFTs, they were clearly no match for HMRC. \ud83d\ude45<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">How were they caught by HMRC? \ud83d\udc40<\/h2>\n\n\n\n<p>Just when you\u2019re confident your gadgets are techier than HMRC\u2019s &#8211; boom. They upgrade. And that is pretty much what happened here.&nbsp;<\/p>\n\n\n\n<p>It\u2019s no secret that HMRC can be quite\u2026 conservative when it comes to updating their software. But that didn\u2019t stop them from busting this fraud scheme. \u274c<\/p>\n\n\n\n<p>Nick Sharp, the deputy director at HMRC <s>bragged<\/s> said:<\/p>\n\n\n<\/div> <!-- .c-body -->\n\n<div class=\"b-highlight-mini m-blue m-align-left\">\n    <div class=\"b-block-body\">\n        <h4>\u201cLet this serve as a warning to those looking to hide money from the tax authorities.<br \/>\nWe constantly adapt to new technology to ensure we keep pace with how criminals and evaders look to conceal their assets.\u201d<\/h4>\n\n    <\/div>\n<\/div> <!-- .b-highlight-mini -->\n\n<div class=\"c-body\">\n\n\n\n\n<p>HMRC 1 &#8211; tax evaders 0<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">So what was the end result?<\/h2>\n\n\n\n<p>We say seized, but really HMRC didn\u2019t go in and grab the NFTs like an episode of CSI. After all, they\u2019re <em>digital<\/em> tokens.<\/p>\n\n\n\n<p>What really happened was HMRC secured a court order to block the resale of the NFTs. So the NTFs are now worthless.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Remember that time HMRC seized NFTs? Yep that\u2019s right! Back in February 2022, HMRC took hold of three NFTs which were involved in a massive \u00a31.4million VAT fraud scheme. Let\u2019s have a look at what went down. \ud83d\udc47 First of all, what are NFTs? NFT stands for non-fungible tokens. They\u2019re unique (a.k.a non-fungible) digital tokens [&hellip;]<\/p>\n","protected":false},"author":30,"featured_media":42233,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[299,306],"tags":[419,102],"class_list":["post-22234","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blog","category-tax-news","tag-crypto","tag-hmrc"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.8 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>HMRC seizes NFTs: a saga &#8211; Taxfix (formerly TaxScouts)<\/title>\n<meta name=\"description\" content=\"Back in February 2022, HMRC seized three NFTs which were involved in a huge \u00a31.4million VAT fraud scheme. 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