A new economic crime levy is payable by firms with turnover over £10.2m. The deadline for registration and the first annual payment is 30 September 2023, after which, it will be payable on an annual basis, provided the firm is still liable to pay.
In this alert, non-contentious partnership law Partner, Corinne Staves, provides an overview of the new levy and outlines what firms need to consider in the lead up to the deadline.
The Economic Crime (Anti-Money Laundering) Levy (the levy) is intended to raise £100 million per year from the anti-money laundering (AML) regulated sector to pay for government initiatives to tackle economic crime. The government believes it is fair and proportionate that as the sector most exposed to money laundering risk, the AML-regulated sector should be the principal contributor to the reform initiatives that will benefit them and help make the UK a safer place for them to do business.
Under the Economic Crime (Anti-Money Laundering) Levy Regulations 2022, firms which are subject to AML regulations are subject to this new levy. The levy is an annual fixed fee, payable to the relevant collection authority. HMRC is the collecting authority for firms regulated by the Law Society, ICAEW, CIMA, CILEX and others. The FCA is a collecting authority for businesses that it regulates and those firms must register with the FCA and their processes may differ from HMRC’s.
The LLP or the partners of a partnership need to register for the levy. This cannot be done by a tax agent for the firm. They register with the collecting authority and then submit an online return.
The levy amount is calculated according to a firm’s total UK revenue calculated under UK GAAP (not just the proportion of revenue attributable to the activities which are subject to AML regulation). It is payable in respect of financial periods from the financial year 1 April 2022 to 31 March 2023 onwards, and is calculated by reference to the firm’s accounting year which ended in that period. The levy is payable by 30 September for each year in which a firm exceeds the relevant threshold.
The amount of the levy is determined by the bands as set out below:
|Annual levy payable
(at 30 September 2023)
|£10.2 million to £36 million
|£36 million to £1 billion
|more than £1 billion
Given that the levy correlates to revenue, firms are unlikely to consider this annual levy an unmanageable cost or a threat to cash flow. However, this is another administrative burden. Firms need to assess their turnover and the band thresholds annually to ensure the correct levy is paid by the deadline. Firms with turnover below the £10.2m threshold, or whose turnover varies significantly each year, will need to keep this under close review to ensure that the firm does not omit to submit a return or pay the correct levy.
Where firms launch, or cease to practice, part-way through a year (for example, due to merger) consideration of the part-year apportionment rules will be needed. Complexities may also arise if firms change their year-end date by shortening their accounting period (which some firms are contemplating as a result of basis period reform tax changes).
If you have any questions arising from this alert or wish to discuss the levy in more detail, please contact Partner Corinne Staves.
Corinne Staves is recognised by Chambers and Partners UK 2023 as “Star Individual” in the field of Partnership (Non-Contentious) and “Spotlight Table” for Partnership (Large International Structures),and is described as being “head and shoulders above everyone else and has incredible presence in the market.” She is also ranked by Legal 500 2023 as “Leading Individual” in the area of Partnership law and recognised her as a “standout partner”.
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