Cash News
I’m going through a slightly messy divorce and I’m concerned that my ex-partner is concealing assets from me when we’re discussing the financial settlement. In particular, I’m sure I overheard conversations about bitcoin while we were living together. I don’t have the first clue about cryptocurrency and don’t even know the right questions to ask or places to look. I’m not sure my lawyer does either. What should I do?
Keith Williamson, managing director of Alvarez & Marsal’s disputes and investigations team in London, says this is a common and difficult challenge faced by divorcing couples today. If you can afford professional help, experienced family lawyers and forensic accountants should be able to assist you in asking the right questions and reviewing disclosures — and tracing cryptocurrency movements, if they identify any digital assets held by your other half.
There are some initial steps you can take yourself, however, to identify whether your ex-partner is being less than forthcoming about their ownership of cryptocurrency.
First, review existing data and documentation you hold plus disclosures made by your ex-partner for any evidence of digital assets. For example, bank statements may show references to payments to popular cryptocurrency exchanges (a simple web search will reveal the names of many of the common exchanges used for such transactions). If these entries are identified, questions can be posed to your ex-partner’s representatives to elicit additional information about why transactions had been entered into while no digital assets have been disclosed.
Similarly, you may identify other indicators of cryptocurrency assets and transactions in peer-to-peer (P2P) payment service statements, such as PayPal, or in emails, WhatsApp messages, hard drives and thumb drives that you have access to.
It is worth also looking out for mentions of particular digital asset names and tickers (for example, bitcoin, ethereum, ETH or USDT), digital asset wallet addresses (which are typically made up of long strings of upper and lower case letters and numbers), log-in details for exchanges, and “seed phrases” which are, in effect, the keys to unlock digital asset wallets and are often written or printed, appearing as a sequence of random words.
If, through your inquiries or further disclosure, you ascertain that digital assets are held by your ex-partner, it would be advisable to ensure that all have been identified and establish their current whereabouts.
Here, it will be necessary to seek the assistance of a professional, with a strong working knowledge of cryptocurrency and the blockchain. The public nature of the blockchain — in effect a set of bank statements for digital asset transactions — means this process of tracing transactions through wallets and via exchanges will be different from traditional fund tracing, where court orders may first be needed to obtain bank statements.
However, if transactions are traced to an exchange it will be necessary to seek a court order to elicit information about ownership of those assets and any subsequent movement off the exchange into other digital wallets. If your ex-partner’s assets appear to remain on a digital asset exchange, this may be an opportunity to seek a freezing order in court.
While the digital asset world can appear unfamiliar, secret or daunting to the uninitiated, there can be a lot of readily available evidence to help you ask the right questions during your divorce discussions and ensure that the wool isn’t pulled over your eyes about assets that might form part of your settlement.
Why is HMRC chasing me for foreign taxes?
I recently received a notice from HM Revenue & Customs stating that I owe taxes to a foreign tax authority. This has left me quite perplexed. How can HMRC enforce tax claims from a foreign country? Can I dispute the claim? And what are the potential consequences of non-compliance?
Adam Craggs, partner and head of tax disputes at RPC, says HMRC administration and collection powers can extend to foreign taxes if there is an agreement, or multiple agreements, in place between the UK and the relevant foreign jurisdiction, that cover your circumstances.
Close to 150 jurisdictions participate in the Multilateral Convention on Mutual Administrative Assistance in Tax Matters, which includes provisions enabling the exchange of information and assistance in recovery of tax claims. In addition, the UK is a party to many other bilateral agreements with other countries through double taxation conventions.
Our next question
From September, both our children will be at school. We mean to keep our brilliant nanny on full time as I know we’d struggle to find a flexible part-time nanny to jump in on sick days as well as to do school drop-offs and pick-ups on the days we commute, which can change weekly. As she will have less to do during term time while the kids are at school, we’ve discussed her helping me with business-related administrative tasks, which she’s keen to take on when time allows. Does this mean I can now start paying her through my limited company to offset her salary?
If you want to verify the legitimacy of HMRC’s notice, you will need to check its legal basis, making sure HMRC is exercising its powers correctly in your particular circumstances. You can consult a solicitor to advise you accordingly. In addition, it is important to check the details on the notice itself to ensure that, for example, HMRC has not issued the notice to the wrong person.
If you are confident the notice has been properly issued and lawful, you should check whether you agree on the amount demanded. If it is not clear from the notice how it has been calculated or the basis of the calculation, you should request further information from HMRC. It might also be appropriate to consult a tax adviser who can offer guidance on any potential tax liability you might have in the relevant jurisdiction.
If you dispute the claim, you may be able to start a legal challenge, raising a dispute with the tax authority in the foreign jurisdiction. Also, depending on the circumstances, entering into negotiation with HMRC and the foreign tax authority might be an option.
If you do not dispute the claim correctly or fail to comply with the notice, HMRC could continue to treat the claim as if it were a UK tax debt and enforce accordingly. It is therefore advisable to act quickly and seek appropriate legal advice, before HMRC takes further steps.
The opinions in this column are intended for general information purposes only and should not be used as a substitute for professional advice. The Financial Times Ltd and the authors are not responsible for any direct or indirect result arising from any reliance placed on replies, including any loss, and exclude liability to the full extent.
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