Are you ready for the Economic Crime Levy?

On 28 February 2023, HM Treasury published draft regulations, together with an explanatory memorandum, that revise and make further provision for assessment, payment, collection, and enforcement of the Economic Crime Levy (ECL). Once the regulations are made.

The ECL is an annual fixed charge payable by 30 September by anti-money laundering regulated entities with annual UK revenue in excess of £10.2 million. ECL applies to individuals, partnerships as well as companies. ECL is expected to raise in the region of £100 million a year to help tackle money laundering.

The ECL will be collected by the three anti-money laundering statutory supervisors: HMRC, the Financial Conduct Authority (FCA) and the Gambling Commission (GC). HMRC have published guidance on the ECL which is relevant to organisations they supervise.

The ECL fixed fee is based on UK revenue in the accounting period ending in the previous financial year.

The first payment for the ECL will be due on 30 September 2023, with reference to the financial year to 31 March 2023. 

The regulations cover:

• Assessments by HMRC and the GC when the relevant entity has failed to file an ECL return, keep the required records, has submitted an inaccurate or incomplete return or obtained a repayment that was not due. Assessments must be made within four years of the submission of a return or 20 years from the due date when no return was submitted.
• Financial penalties payable for a range of failures, including failure to file a return or pay the levy by the due date. Penalty amounts can be fixed, starting at £250, or 5% of the amount owed but not paid. These cannot be imposed if a reasonable excuse is established.
• Reviews by HMRC and appeals to the First-tier Tribunal in relation to amounts collected by HMRC or the GC. Amounts collected by the FCA are subject to challenge by way of judicial review only.

The regulations permit the FCA to amend, replace or withdraw a notice of liability to pay the levy. In addition, following criticism by the House of Commons Select Committee on Statutory Instruments, entities supervised by the GC will be able to amend their ECL returns at any time up to 12 months after the filing date and the GC will not be able to publish information in a public register.

The regulations also cover liability for payment of the ECL in cases of insolvency, the procedure for submitting repayment claims and the records that must be maintained.

HMRC will publish further guidance on how to register for, and payment of, the ECL, later this year.