Guidance

Penalties for not complying with the Economic Crime Levy — CC/FS77

Published 7 November 2024

The Economic Crime Levy (ECL) is an annual charge on businesses that are regulated for anti-money laundering purposes, and whose UK revenue is more than £10.2 million per year.

Those businesses need to submit a return and pay the levy every year.

If you’re liable to pay the levy, this factsheet tells you about the penalties we may charge you if you don’t comply with your obligations. We can charge these penalties under Regulation 20 of The Economic Crime (Anti-Money Laundering) Levy Regulations 2022.

This factsheet is one of a series. For the full list, go to GOV.UK and search ‘HMRC compliance checks factsheets’.

If you don’t submit your ECL return on time

You need to submit an ECL return on or before 30 September after the end of each financial year. If you don’t do this, we can charge you an initial penalty of £250.

If you still haven’t submitted a return within 3 months of the due date, we can charge you a further penalty. That penalty is 5% of the levy you’re due to pay for the financial year. We’ll use the information we have to make a reasonable estimate of the levy due. We’ll then send you an assessment for that amount and any penalties that are due.

If you don’t pay the correct amount of levy on time

You must pay the full amount of levy on or before the due date. The due date is 30 September after the end of the financial year the liability arises. If you don’t pay the full amount on time, we can charge you late payment penalties. These are:

• an initial penalty of £250 for not paying by the due date
• an additional £250 penalty if you haven’t paid 30 days after the due date
• a penalty of 5% of the levy, if you still haven’t paid 3 months after the due date

If you also haven’t submitted your ECL return, we’ll use the information we have to make a reasonable estimate of the levy due. We’ll do this when we calculate the 5% late payment penalty.

If you amend your ECL return after you’ve submitted it, there may be additional levy due. If there is, we’ll only charge you late payment penalties if you don’t pay the additional amount immediately. This also applies if we find additional levy due as a result of a compliance check of your ECL return.

Penalties if we find something wrong during a compliance check

If we’re opening a compliance check into your ECL return, we’ll write to let you know. If we then find something wrong, we can charge you penalties. These can be ‘tax-related’ or fixed, depending on what we’ve found.

Tax related penalties

We can charge a ‘tax related’ penalty if (any of the following):

• you submit an inaccurate ECL return
• you do not tell us that an assessment we made was too low
• you do not tell us that a repayment we made was too high

We calculate a ‘tax related’ penalty as a percentage of an amount. For the ECL, the penalty is 5% of the amount of levy that you didn’t declare or tell us about. We’ll normally send you an assessment for this amount of levy. In most cases the penalty is 5% of the amount of levy we assess you for.

Fixed penalty

If we find that you haven’t kept accurate records for ECL purposes, we may charge you a penalty.

This is a fixed penalty and can be up to £3,000. The amount we’ll charge depends on what we find about your record keeping, and whether it stopped you from declaring the right amount of ECL.

What to do if you disagree

If we charge you a penalty, we’ll send you a penalty notice. If you disagree, you’ll be able to appeal. The penalty notice will tell you how.

You’ll also be able to appeal against any assessment we send you.

For more information about your appeal rights, go to GOV.UK and search ‘HMRC1’ or ‘disagree with a tax decision’.

If you have a reasonable excuse

We won’t charge you a penalty if you have a reasonable excuse for not meeting an ECL obligation.

A reasonable excuse is something that stopped you from meeting the tax obligation on time, which you took reasonable care to meet. It might be due to circumstances outside your control or a combination of events. Once the reasonable excuse has ended, you must put things right without any unnecessary delay.

Whether you have a reasonable excuse depends upon the circumstances that stopped you from meeting the obligation. And also your particular situation and abilities. This may mean that what is a reasonable excuse for one person may not be a reasonable excuse for someone else. If you think you have a reasonable excuse, please tell us. If we accept that you have a reasonable excuse, we will not charge you a penalty.

If there was anything about your health or personal circumstances that contributes to you not meeting your tax obligations, please tell the officer you’re dealing with. Telling them will mean that they can take this into account when considering whether you had a reasonable excuse.

More information

Our privacy notice

Our privacy notice sets out the standards that you can expect from us when we ask for information or hold information about you. To read this, go to GOV.UK and search ‘HMRC Privacy Notice’.

If you are not happy with our service

Please tell the person or office you’ve been dealing with. They’ll try to put things right. If you are still not happy, they’ll tell you how to make a formal complaint.