Find out how to appeal against an HMRC decision, and the penalties for not following the rules.
HMRC may impose measures, including a financial penalty, if you do not comply with the Money Laundering Regulations. In more serious cases, it may consider criminal prosecution.
This guide tells you what you can do if you disgaree with an HMRC decision. It explains:
- how to ask for a review
- how to appeal to the tribunal
- civil penalties and criminal offences under the Money Laundering Regulations
If you disagree with an HMRC decision
You might want to challenge an HMRC decision if, for example HMRC:
- refuses to register your business under the Money Laundering Regulations
- suspends or cancels your registration
- charges you a penalty for not complying with the regulations
- publishes a statement
- prohibits a person from managing
When HMRC tells you about a decision, it will usually offer you a review by an officer who was not involved in the original decision.
You cannot continue trading while a review is carried out if the decision was to refuse to register your business or to cancel your registration.
You can appeal to a tribunal if you disagree with the outcome of the review.
Penalties if you do not comply with the regulations
You’ll be protected from penalties and prosecution if you can show you’ve followed HMRC’s Money Laundering Regulations guidance. HMRC can take various measures from warning letters to criminal prosecution if your business does not comply with the regulations.
These measures are to encourage you to comply with the regulations. The action that HMRC takes depends on the seriousness and potential impact of the failures identified.
You may have to pay a penalty to HMRC if you fail to comply with the regulations.
The penalty that HMRC imposes must be appropriate for the failure and at a level that:
- is proportionate to the failure
- dissuades non-compliance
The amount of the penalty will take account of the:
- reason for non-compliance
- seriousness of the offence
- compliance history of the business
- relative size of the business
- benefits received
- amount exposed to money laundering activities
HMRC will allow reductions to the penalty when you make an unprompted disclosure that you’ve breached the regulations. An unprompted disclosure is when you contact HMRC before it contacts you for any type of enquiry or intervention.
You should make a disclosure to HMRC in writing, which should include how you intend to become fully compliant.
Penalty administration charge
HMRC will introduce a penalty administration charge for all anti-money laundering supervision penalties issued from 25 July 2018. The charge is for costs of issuing penalties to businesses that do not comply with the Money Laundering Regulations.
HMRC will charge up to £1,500, as well as the penalty for breaches of the Money Laundering Regulations such as failures for:
- customer due diligence
- risk assessment
- policies, controls and procedures
- record keeping
All other penalties
HMRC will charge up to £350, as well as the penalty for failures to, for example:
- tell HMRC of changes to your business
- provide information
Proceeds of Crime Act and the Terrorism Act offences
If you do not comply with the Money Laundering Regulations you could be committing offences under the:
- Proceeds of Crime Act 2002
- Terrorism Act 2000
You can get more detailed information about the criminal offences and penalties for money laundering and terrorist financing on anti-money laundering for: