The Economic Crime Levy – what art dealers need to know
The Economic Crime Levy (“ECL”) is now in play and introduces significant costs for medium to large art market participants.
The ECL was introduced via the Finance Act 2022 which received Royal Assent in February 2022. The Economic Crime (Anti-Money Laundering) Levy Regulations 2022 is the instrument that sets out the key provisions.
Why has the ECL been introduced?
The aim of the ECL is to raise £100 million a year from around 4000 businesses to fund the Government’s commitments to tackle money laundering and meet the 2019 Economic Crime Plan.
Combined public and private sector resourcing is seen as the most sustainable method for such funding.
Who is liable?
The ECL applies to all businesses that are subject to the Money Laundering Regulations with a UK revenue of over £10.2M.
How much are businesses required to pay?
The amount of levy payable is linked to the size of the business as determined by its total UK revenue. UK resident art dealers with permanent establishments outside the UK will be permitted deduct the revenues attributable to the activities of the non-UK permanent establishments by applying a fair and reasonable apportionment.
Arguments during the consultation stage to make the levy proportionate to the AML regulated activities of a business (as opposed to total revenue) were not upheld. Nor was the argument that gross profit would be a more proportional basis of applying the levy to art market participants.
| UK Revenue | Size | Levy |
| Between £0-£10.2m | Small | Nil (exempted) |
| Between £10.2m – £36m | Medium | £10,000 |
| Between £36m – £1bn | Large | £36,000 |
| Over £1bn | Very Large | £250,000 |
Who will collect the levy for AML regulated art dealers?
HMRC will be responsible for collecting the ECL. Art market participants will be required to declare on an annual basis to HMRC whether the ECL applies to them and the band they fall under.
When will the levy need to be paid?
The ECL will be imposed from the financial year 1 April 2022 – 31 March 2023 and charged at the end of each financial year. First payments will fall due in the financial year 1 April 2023 to 31 March 2024. The ECL is due to be reviewed at the end of 2027 and could be subject to revision.
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