On the 14 February 2022, HM Revenue and Customs (‘HMRC’) announced that it had arrested three people on suspicion of a VAT repayment fraud in the sum of £1.4 million revolving around 250 alleged fake companies.  As part of the investigation HMRC has obtained a Court Order to prevent the sale of Non-Fungible Tokens.

Helen Holder of Kangs Solicitors explains the nature of Non-Fungible Tokens (‘NFTs’).

Kangs Solicitors has been acting in high-profile white-collar crime investigations and prosecutions since 1997. Chambers & Partners states:

‘Noted expertise in SFO and HMRC cases. Extremely well-reputed for advising on high-value matters such as MTIC, POCA and property frauds.’

Recognised as a national leader in the field of criminal fraud defence, we are proud of our reputation and:

  • both leading directories, the Legal 500 and Chambers and Partners, rank the firm in the highest categories for white collar fraud defence work
  • the firm has won the Legal 500 award for Criminal & Fraud Law Firm of the Year
  • Hamraj Kang, the founding solicitor of the firm, has won the Legal 500 award for ‘Individual Criminal & Fraud Solicitor of the Year as well as being ranked as a ‘star individual’ for many consecutive years by Chambers and Partners for his work in criminal fraud.

Our team can be contacted for confidential advice and assistance as follows:

The HMRC Investigation | Kangs Non- Fungible Tokens Solicitors

It is alleged the three individuals who have been arrested created two hundred and fifty fake companies in order to claim back VAT to which they were not entitled.   

The allegation is that they have created the false impression that they were engaged in legitimate business activities concealing their identities by: 

  • creating false invoices;
  • utilising pre-paid unregistered mobile phones;
  • using virtual private networks;
  • adopting bogus and stolen identities;
  • providing incorrect addresses.

What are NFTs? | Kangs Digital Tokens Solicitors

  • NFTs, which originally emerged in 2014, are individual tokens, with no tangible form, having valuable information stored in them.
  • They have a unique digital signature that can be traded.  A record of ownership is kept on a shared online ledger known as the blockchain. NFTs have been promoted by various celebrities and are seen as collector items or an investment opportunity.
  • Because they hold a value primarily set by the market and demand, they can be bought and sold just like other physical types of art. NFTs’ unique data makes it easy to verify and validate their ownership and the transfer of tokens between owners.
  • They are likened to certificates of ownership for virtual assets such as digital artwork, GIFs, Memes and music. 
  • In March 2021 Jack Dorsey, founder of Twitter sold his first tweet as a NFT for over $2.9 million. 
  • The British Museum has been involved in selling 20 JMW Turner paintings as NFTs. 
  • In 2021 more than £32billion of cryptocurrency was sent to NFT related contracts (up from £78 million in 2020). 

How Can NFTs Be Used in Criminal Activity? | Kangs Crypto Currency Solicitors

NFTs can be used illegitimately where, inter alia:     

  • their value is artificially inflated through a process known as ‘wash trading’, whereby tokens are traded between various accounts owned by the seller to give a misleading view of its value and liquidity.  
  • criminals hide their illicit financial gains.

HMRC Comment:

Nick Sharp, HMRC’s Deputy Director of Economic Crime said:

‘Our first seizure of a non-fungible token serves as a warning to anyone who thinks they can use crypto assets to hide money from HMRC.

We constantly adapt to new technology to ensure we keep pace with how criminals and evaders look to conceal their assets’.

It is reported that in the first seizure of its kind, HMRC has seized crypto assets worth around £5,000 and three pieces of digital artwork NFTs that are yet to be valued. 

Fraud Investigations & Prosecutions | Kangs Financial Fraud Solicitors

For over two decades Kangs Solicitors has represented clients facing a wide range of fraud investigations and prosecutions including cybercrime.

We provide specialist advice and representation in relation to frauds and disputes involving crypto assets and cryptocurrencies.

Who Can I Contact For Help? | Kangs National Criminal Defence Solicitors

Our expert 24/7 Rapid Response Police Station Team is here to assist you on 07989 521 210 should you require advice and assistance out of office hours.

Hamraj Kang leads an award-winning team of lawyers nationally recognised for its excellence and expertise in the area of white-collar crime investigations and prosecutions.

We welcome enquiries by telephone or email.

We provide an initial no obligation consultation from our offices in London, Birmingham and Manchester.

Alternatively, we provide initial consultations by telephone or video conferencing.

Contact

Hamraj Kang
hkang@kangssolicitors.co.uk
07976 258171 | 020 7936 6396 | 0121 449 9888

Tim Thompson
tthompson@kangssolicitors.co.uk
020 7936 6396 | 0121 449 9888

John Veale
jveale@kangssolicitors.co.uk
0161 817 5020  | 020 7936 6396 07989 521 210