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HMRC internal manual

MLR1 Penalties Guidance

Penalties guidance: other penalties under MLR 2017

The 2017 regulations introduce a number of new obligations from 26 June 2017

 

Information and entry to premises

 

HMRC requires information at registration as part of the application process.  This may involve requests for additional information in order to further consider the application.

A fixed penalty of £500 may be issued where a business fails to:

  • provide information requested at registration, Regulation 57(1)
  • provide information required under the funds transfer regulations, Regulation 64

In most situation an officer is able to gain entry to business premise through an arranged appointment.  In some cases a business may not be willing to allow entry or HMRC may have to seek a warrant from the court.

A fixed penalty of £500 may be issued where a business fails to:

  • allow an officer entry to premises, Regulation 69

HMRC may send you a notice requiring specific information or documents or to attend for an interview under Regulation 66.  A failure to comply may result in:

  • a penalty of £500 or
  • the registration being suspended or cancelled

A fixed penalty of £500 may be issued where a business fails to:

  • provide new customers with the data protection information required under Regulation 41(4) before establishing a business relationship

Approvals in relation to EABs, ASPs and HVDs (Regulation 26)

 

HMRC will approve a beneficial owner, officer, manager or a sole practitioner of an EAB, ASP or HVD where they do not have a conviction for a relevant offence under schedule 3 of the Regulations.  The individuals can only act in that capacity with HMRC approval.

A fixed penalty of £5,000 may be imposed on a person who:

  • requires Regulation 26 approval but acts in the above capacities without approval
  • fails to notify HMRC of a conviction for a relevant offence under Regulation 26(10) within 30 days of the conviction

A breach of this prohibition is a criminal offence for the persons who requires approval.

HMRC may seek a court order ordering the sale of a beneficial owner’s interest in a business if they are convicted of a relevant offence.

A fixed penalty of £5,000 may be imposed on a business who:

  • fails to take reasonable care to ensure that persons without approval do not act as a beneficial owner, officer, manager or a sole practitioner
  • who fails to notify HMRC of a conviction for a relevant offence within 30 days of the date they became aware of the conviction

Prohibition on management (Regulation 78)

 

HMRC may impose a temporary or permanent management prohibition on an officer of a business where they are knowingly concerned in a breach.

Fixed penalties of £5,000 may be imposed:

  • on an officer of a business who has not complied with a temporary or permanent prohibition on management imposed under Regulation 78(2)

The business who fails to take reasonable care and allows a person who has been prohibited from management to act in a management role may be penalised on the basis of the culpable turnover or clients that the prohibited person manages, see MLR1PP8150

Notification of the identity of a nominated officer and compliance officer (Regulation 21(4))

 

A business is required to notify HMRC of the identity of the nominated officer and compliance officer (if applicable to the business) and if the person acting in the role changes.

A fixed penalty of £5,000 may be imposed for a failure to notify within 14 days of an appointment.

 

 

 

 

Penalties guidance: how to calculate penalties: contents (154932)
  1. MLR1PP9500
    Other penalties under MLR 2017