Do not penalise solicitors because of financial crime

Plans to hit the legal profession with a levy for financial crime, when they are already devoting resources to preventing the system from being abused by money launderers, have prompted solicitors’ leaders to warn of an unjustified negative impact on the sector.

In particular, the Law Society of England and Wales warned in its response to a government consultation that a levy calculated on firms’ income could be harmful to the profession.

Outgoing Law Society president Simon Davis, said:

“The legal profession is fully committed to supporting the fight against economic crime and takes their anti-money laundering responsibilities very seriously.

“Law firms already play an important role in tackling money laundering, as demonstrated by the substantial costs and resources allocated by the profession to comply with its anti-money laundering (AML) and financial crime obligations.

“The imposition of the levy is a special tax on the legal profession.

“Further increasing the costs of doing business impacts the competitiveness of the UK legal sector, and the willingness of law firms to invest in the UK.

“This is compounded by the Covid-19 pandemic, which has seen large parts of the profession take measures to keep their firms running, while simultaneously preparing for the end of the Brexit transition.”

Any levy based on income would be especially harmful to the profession, as basing it on revenue confuses it with the scale of the risks it is intended to protect.

If the levy is to go ahead, a calculation-based model based on the number of Suspicious Activity Reports (SARs) which a firm submitted the previous year would be simple, cheaper and fairer than a revenue-based levy.

An exemption should also exist for small firms with a revenue of under £10.2 million a year. It is also essential that the levy is based on domestic revenue generated by AML-related activity only.

Simon Davis said:

“With the UK in recession, the predicted future state of the economy being so uncertain and the legal sector already struggling in so many areas, imposing a tax on the profession is an unjustified step too far.”

Kindly shared by The Law Society of England and Wales

Main article photo courtesy of Pixabay