Draft legislation being considered by the British government could impose tax bills of up to £250,000 on some large law firms, according to the Law Society Gazette of England and Wales.
The Gazette says that the government is seeking views on the legislation, which is aimed at raising money to fight economic crime.
HM Treasury has opened a “technical consultation” on draft legislation for a levy that aims to raise £100 million per year, ahead of its inclusion in the 2021-22 Finance Bill.
The tax will be paid by all groups that are subject to UK anti-money-laundering (AML) regulations – including legal practices, banks, and accountancy firms.
Those entities with more than £10.2 million in UK revenue will be liable to pay the levy, which will first be collected in the 2023/24 financial year. Companies will pay the levy as a fixed fee, based on the ‘size’ band they belong to, according to the Gazette.
According to the draft legislation, an entity with ‘medium’ UK revenue – defined as between £10.2 million and £36 million per levy year – will be charged between £5,000 and £15,000 annually.
Those with ‘large’ revenues – between £36 million and £1 billion per levy year – will be charged between £30,000 and £50,000 annually.
Meanwhile, companies with ‘very large’ revenues of more than £1 billion per levy year will be charged between £150,000 and £250,000.
‘Special tax’ on legal sector
HM Treasury said that the final figure in the legislation would not be a range, but a single figure.
The levy is not to be considered in calculating profits or losses for the purposes of income tax or corporation tax, and will be collected by the three public-sector AML statutory supervisors: the Financial Conduct Authority, HM Revenue & Customs, and the Gambling Commission.
In response to an earlier consultation, the Law Society described the levy as a “special tax on the legal profession” that would hit the international competitiveness of the legal sector, and the willingness of law firms to invest in the UK.
The technical consultation will run until 15 October.