Prepare for the Economic Crime Levy (ECL) with HMRC's Latest Guidance

14 Aug

Countdown to Change

In just over a month, the Economic Crime Levy (ECL) will come into effect, marking a significant step in the fight against economic crime. HMRC is committed to ensuring you're well-prepared for this new levy, and they've taken the initiative to provide comprehensive guidance to help you navigate it seamlessly.

Understanding the ECL

The ECL is directed towards businesses falling under the umbrella of the Money Laundering Regulations (MLR). Its primary goal is to generate £100 million annually, contributing to the ongoing efforts against economic crime and reinforcing anti-money laundering (AML) strategies.

Who's Affected?

Starting this September, companies with a UK revenue exceeding £10.2 million will be subject to the ECL. The fee ranges from a reasonable £10,000 for smaller businesses to a more substantial £250,000 for larger enterprises. Remembering eligibility depends on your financial year, spanning from April 1, 2022, to March 31, 2023.

Navigating the Process

For eligible businesses, the process involves registering for the ECL and submitting an annual return. The initial payments are due by September 30, 2023. The levy collection will be overseen by HMRC, the Financial Conduct Authority (FCA), or the Gambling Commission, ensuring efficient execution.

Accountancy Sector Considerations

Businesses in the accountancy sector can breathe easily as HMRC collects the levy from firms supervised by the 22 professional body supervisors (PBSs).

Breaking Down the Charges

Your business revenue bracket determines the specific charge you'll face:

Medium-sized businesses (£10.2m-£36m): An annual fee of £10,000 applies.
Large companies (£36m-£1bn): The fee is £36,000.
The largest enterprises (over £1bn): Brace yourself for a £250,000 charge.

Exemptions for Small Businesses

If your business falls below the £10.2 million revenue threshold, you can breathe a sigh of relief. The ECL doesn't apply to you, and there's no need to register with HMRC.

Compliance is Key

To ensure a smooth process, timely submission of your ECL return and proper record-keeping are essential. Failure to meet these requirements could result in penalties starting at £250 or 5% of the outstanding amount. However, reasonable excuses can exempt you from these penalties.

Timeline for Assessment

Timeframes for assessing your situation bind HMRC and the Gambling Commission. You must complete assessments within four years of your return submission or within 20 years from the due date if you fail to submit a return.

Mark Your Calendar

September 30, 2023, is the annual ECL registration and payment deadline. As the deadline approaches, HMRC will continue to provide guidance, covering essential topics such as registration procedures, submitting ECL returns, and making payments.