Understanding the Economic Crime Levy

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Economic crime is one of the biggest drains on government resources; its own research says that it costs £14.4 billion per year.

The Economic Crime Levy centres around establishing a new taskforce aimed at addressing economic crime through its funding. The Levy isn’t just important for businesses who could unwittingly come across economic crime, but any business with dealings in finance.

In this post, we’ll define what the Economic Crime Levy is and who needs to pay it. We’ll also talk about the wider implications for businesses, how it’s calculated, and how to register for the Levy if you’re a business that needs to.

What is the Economic Crime Levy?

The Economic Crime Levy or ECL is an annual charge that must be paid by all individuals, companies, and partnerships meeting the following conditions:

  • Supervised under the Money Laundering Regulations (MLR), and
  • UK revenue exceeds £10.2m per year.

Who has to pay the Economic Crime Levy?

Supervised businesses include:

  • Credit and financial institutions
  • Tax advisers
  • Auditors
  • Accountants in practice
  • Independent legal professionals
  • Estate and letting agents
  • Casinos
  • Auction platforms.

They can be supervised by one of three authorities:

  • HMRC
  • Financial Conduct Authority (FCA)
  • The Gambling Commission (GC).

It’s important to know which authority supervises your own business, as this will impact how it pays the Economic Crime Levy.

How is the Economic Crime Levy calculated?

The Economic Crime Levy is an annual fixed fee, that must be paid by 30th September each year.

Payment levels depend on which ECL revenue band they fall into, based on their annual UK revenue for the previous financial year.

The band sizes are as follows:

ECL Band SizeUK Revenue
Small< £10.2 million
Medium£10.2m – £36m
Large£36m – £1 billion
Very Large> £1 billion

With these conditions in mind, the Levy amounts look like this:

ECL Band SizeECL Fee
SmallN/A – No ECL Liability
Very Large£250,000

How will the Economic Crime Levy impact my business?

If your business’ UK revenue is anything over £10.2 million, it will need to pay the Economic Crime Levy every year.

You should also be sure to check what authority your business is supervised under – as shown above, this will determine if you have to pay.

To ensure that your business isn’t overpaying or underpaying for the Levy, you’ll want to gather information on all of your revenue. This includes your turnover for that period and any other amounts.

How do I register for the Economic Crime Levy?

Whether you have to submit a return or not depends on what authority is supervising you:

Financial Conduct Authority Registration

Businesses that were under anti-money laundering supervision by the FCA between 6 April 2022 and 5 April 2023 will have seen the new Levy appear on their invoices from July 2023.

To make sure businesses are charged the correct amount, you must submit your relevant financial data via the new ‘Reg Data Report’ (FIN074).

The Gambling Commission (GC) Registration

The Gambling Commission is responsible for collecting the Levy from licensed casino operators. The Gambling Commission will provide operators with the details of how to submit a return.

A return should include the following details:

  • The length of relevant accounting period
  • UK revenue for that accounting period
  • ECL band and amount due.

Regardless of whether the operator meets the threshold for paying the ECL in a given year, they are still required to submit returns annually.

HMRC Registration

A business must register themselves for the ECL once – but as above, they need to pay the Levy on an annual basis.

To register for the Economic Crime Levy via the HMRC, you’ll need details of:

  • UK revenue for the past financial year
  • The date anti-money laundering-regulated activities started, if it was during the past financial year
  • The business sector the organisation operates in
  • The length of the organisation’s accounting period
  • Contact details of someone within the business, including name, role, email address and telephone number
  • Company/partnership/charity registration number
  • National Insurance number, if you’re a sole trader
  • Unique Tax Reference.

Registration must be done online through the HMRC’s online service.

Here’s the info you’ll need to submit a return for an organisation:

  • The relevant accounting period
  • UK revenue for the relevant accounting period
  • If you stopped or started anti-money laundering-regulated activities, how long you carried out these activities for
  • The name, role and contact details of the person completing the return.

Reduced or partial accounting periods

It’s important to note that the amount you need to pay may be reduced if you carry out regulated activities for only part of the financial year. This reduction is calculated by considering the time you’re supervised for anti-money laundering regulations each day.

If your business doesn’t have accounting periods ending within the year, the relevant period is the one ending within 3 months of the end of the financial year.

And if your accounting period is shorter than a year, the Economic Crime Levy bands adjust based on the number of days your business operated.

Why has the ECL been introduced?

As we said in the beginning, the Economic Crime Levy was introduced to help combat the rising amount of economic crime in the UK. Money made from the Levy will fund the work of the Economic Crime Centre. This is as the government intended in its 2019 Economic Crime Plan, and it hopes to raise £100m a year from the Levy.

What resources and support are available around the Economic Crime Levy?

If you need more guidance on the Economic Crime Levy, you can read the government’s full manual here.

HMRC has published specific guidance for businesses that it supervises, which is available here.

The Financial Conduct Authority (FCA) and Gambling Commission (GC) will publish their own guidance.

Keeping up with changing financial regulations can be a handful – especially if your accounting software isn’t up to the job. Contact PKF Smith Cooper Systems today to see how Sage software can help. Fill in an enquiry form or call us on 01332 959 008.

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