Economic Crime Levy

The Economic Crime Levy (ECL) is an annual fee that will impact organizations under the supervision of the Money Laundering Regulations (MLR) in the UK with an annual revenue exceeding £10.2 million.

How should you prepare for the Economic Crime Levy?

Entities supervised by HMRC (Her Majesty’s Revenue and Customs) will need to:

1.  Register for the ECL.
2. Submit an annual return.
3. Pay the ECL fee each year.

Not all entities will be required to register and submit a return; this depends on your collection authority and it is crucial to identify your relevant collection authority.  Understanding the ECL process for your collection authority is essential. This includes knowing how to:

• Register for the ECL.
• Submit your ECL return.
• Determine the ECL band you fall into to calculate the applicable fee.

How is the Economic Crime Levy collected?

The ECL will be collected by one of three collection authorities:

1. Financial Conduct Authority (FCA)
2. Gambling Commission (GC)
3. HMRC

Each of these authorities is responsible for supervising specific sectors of the economy to prevent money laundering and will collect the levy from the relevant businesses. Even if you are supervised by multiple entities under MLR, you will only need to provide information and make payments to one collection authority.

• If you are solely supervised by HMRC or one of the 22 professional body supervisors listed in the published list, you must register with and pay the ECL to HMRC.
• If you are supervised by the FCA or GC, you must follow their respective ECL processes, regardless of HMRC’s supervision of some of your business activities.

This information and guidance below specifically apply to entities under the collection authority of HMRC.

How do entities responsible to HMRC register for the Economic Crime Levy?

Entities that may potentially be liable for ECL, including individuals, companies, LLPs, or responsible partners in partnerships, should register online with HMRC for the ECL if they:

• Are supervised by HMRC for MLR at any point in the financial year.
• Are supervised by one of the professional body supervisors listed in the published list for MLR during the financial year.
• Are not supervised by the FCA or GC for MLR.
• Have UK revenue equal to or exceeding £10.2 million in the financial year (pro-rated).

Registration for the ECL is a one-time requirement, but you must submit an online return and pay the ECL each year that your UK revenue surpasses the threshold. Unfortunately Tax agents, such as your accountant, cannot register you for the ECL; you must complete the registration yourself.

How to do entities responsible to HMRC register for ECL?

To pay the ECL to HMRC, you must register your business and declare your liability. This registration process is conducted through the HMRC online ECL Service, where you will receive an access code for completion.

Business Groups

If your entity is part of a corporate group, the ECL applies only to eligible entities within your group that meet the specified criteria. Each qualifying group member must individually register, submit annual returns, and make separate payments.

Partnerships

In cases where the responsible partners of a partnership are liable for the levy, nominated partners must submit an economic crime (anti-money laundering) levy return on behalf of the partnership.

Submitting a Return

You can complete and submit online returns to report:

• The length of your relevant accounting period.
• Your UK revenue for that accounting period.
• Any changes in MLR-regulated activity from the previous financial year.
• Your ECL band and the corresponding amount due.

Even if you do not meet the ECL payment threshold for a particular year, you must still submit a return annually by September 30th.

How do you pay the Economic Crime Levy? What are the bands and fees?

After submitting your return, you can pay your ECL liability online, following the standard tax payment process.

Payment is due by 30 September each year, covering the previous financial year’s period. The amount owed is determined by your entity’s size, based on your UK revenue from the accounting period ending in the previous financial year.

There are four band sizes:

• Small: Under £10.2 million (there is no ECL liability – not required to register with HMRC).
• Medium: £10,000.
• Large: £36,000.
• Very Large: £250,000.

If your regulated activities only span part of the financial year, your payment may be reduced based on the proportion of time you are under MLR supervision. Special considerations apply to businesses with accounting periods shorter than 12 months.

If you would like further information on the ECL you can find this on the HMRC website.

If you would like to speak to a member of our team about how the ECL might impact upon you and your business you can contact us on  0203 697 7147 or use our online web chat in the bottom right corner.