A government consultation closed last week on a proposal from the Chancellor to raise an ‘Economic Crime Levy’ on all UK AML regulated firms, from banks and accountants to regulated art market companies.
The Government hopes to raise £100m a year from the levy to go towards the cost of fighting economic crime in the UK, although there has been no indication as to how much different regulated sectors should contribute, or the likely cost for individual firms.
This came as something of a shock to the art market, seeing as the AML regulations only came into force for the trade at the start of this year and the period for registration with HMRC is being extended until June 2021, to allow for the significant disruption caused to businesses across the market by Covid-19.
The British Art Market Federation (BAMF), dealer associations and leading auction houses have responded to the consultation to argue strongly that the costs of any such levy would be a heavy burden on UK art market firms, coming on top of the significant administrative and financial burden of training staff and developing processes and policies to meet the requirements of the AML Regulations, as well as the annual registration costs with HMRC.
The consultation covered many aspects of the proposed levy, from whether it might be assessed as a portion of firms’ annual revenue or by some other method to whether it should cover just regulated activities or be assessed on all the activities of regulated firms, and if there should be an exemption for small businesses and at what level.
Not knowing how much art market firms might have to pay under the levy did make it difficult to comment on some of the detail, but BAMF and its constituent parts have been arguing strongly why such a levy would be entirely inappropriate for the art market and have made proposals to reduce the potentially disastrous impact of the levy in the event it has to be imposed on the market.
As BAMF chairman Anthony Browne said, “it is difficult to envisage a worse time to be adding costs onto art businesses” and BAMF will continue to keep a close eye on this most unwelcome proposal.
By Tom Christopherson
Legal consultant to Constantine Cannon LLP and Bonhams