As readers may be aware, it was announced last year that a new Economic Crime Levy (ECL) would be introduced, payable by all businesses that are supervised under the Money Laundering Regulations (MLR) with UK turnover exceeding £10.2 million. The first financial year to be assessed is the 12 months to 31 March 2023 and a firm that is supervised for MLR at any time during that period will need to consider the ECL.
The levy is a fixed amount dependent on the turnover band within which the firm falls. This is measured against the firm’s UK turnover for the accounting period that ends in the 12 months to 31 March 2023, and the bands are as follows:
| UK revenue | Firm size | Levy | ||
| Less than £10.2 million | Small | Nil | ||
| £10.2 million – £36 million | Medium | £10,000 | ||
| £36 million – £1 billion | Large | £36,000 | ||
| Over £1 billion | Very large | £250,000 |
Where the firm has multiple supervised entities, the levy will be payable separately by each entity, not collectively as a group. Therefore, two entities with turnover of £37 million and £11 million would pay levies of £36,000 and £10,000 respectively, whereas two entities with turnover of £24m each would each pay a levy of £10,000. In the first example, the overall cost of the levy could be reduced if the economic activities were distributed more evenly between the entities.
Other important points to note when assessing the amount of levy payable are:
- If the business carries out supervised activities during only part of the year to 31 March 2023, the levy is reduced proportionately.
- If the firm’s accounting period ending in the year to 31 March 2023 is shorter than 12 months, the turnover bands are reduced accordingly.
- If the firm was supervised in the year to 31 March 2023 and does not have an accounting period ending in the year, but has an accounting period ending on or before 30 June 2023, the turnover for that accounting period must be used.
The levy will be collected by the Financial Conduct Authority, the Gambling Commission and HMRC. In the case of supervised law firms, the levy will be collected by HMRC.
HMRC has set up an online service which enables firms to register for the ECL, submit a return and pay the levy. Therefore, the first step will be for affected firms to register with HMRC, which can be done here.
Registration is only required once, with returns submitted online and levy payments made on an annual basis. Once the firm has registered, a return will be required each year whilst the firm is supervised for MLR, even if turnover drops below £10.2 million. As the levy is payable by each supervised entity, where a firm has multiple entities each one will need to register separately.
Once the firm is registered, the return can be submitted here.
The deadline for submitting the 2023 return and paying the levy is 30 September 2023. Payments can be made online once the return has been submitted, and HMRC are due to publish guidance on how to make the payment prior to the deadline.
At present, Tax Agents are not able to complete the registration process, submit returns or make payments for their clients, but we can help you determine which band you fall into if there is some uncertainty.
