Solicitors and accountants are at odds over whether the new economic crime levy should be calculated by reference to their income or the number of suspicious activity reports (SARs) they made.
The Law Society said using firms’ income “could be harmful to the profession”, while the Institute of Chartered Accountants in England and Wales (ICAEW) argued that using the number of SARs a firm made in the previous year would encourage under-reporting.
Plans for the economic crime levy were announced in the Budget  in March.
It will be paid by those subject to the Money Laundering Regulations, which in the case of the legal profession are lawyers and firms supervised by the Law Society, Bar Council, Chartered Institute of Legal Executives and Council for Licensed Conveyancers.
The £100m the Treasury intends to raise will supplement public funding of anti-money laundering (AML) efforts.
The consultation issued in July  suggested the levy could consist of three separate elements: a levy based on revenue – potentially £100-200 per £1m of turnover – a small business exemption and, if possible, a money laundering risk weighting.
The Law Society’s response said it was “strongly opposed” to the levy, “which would effectively be an additional tax on the regulated sectors, in order to fund the public sector’s role in the AML system”.
It described the levy as “a special tax on the legal profession” that would increase the costs of doing business and the willingness of foreign law firms to invest in the UK.
Basing it on income would be “especially harmful to the profession”, the society argued, as revenue did not equate to risk, where using the number of SARs from the previous year “would be simple, cheaper and fairer”.
The ICAEW said using revenue was the model with the “fewest disadvantages”. It explained: “We agree that revenue provides proportionality and is a metric that businesses will be able to report easily.
“We also agree that revenue is most likely to lead to fewer unintended consequences and shouldn’t result in a change to behaviour.”
By contrast, attaching the levy to SARs would result “in the unintended consequences of under-reporting”, and the ICAEW argued that the number of SARs reported did not equate to risk.
Where the two bodies agreed was that a revenue-based levy should use domestic income generated by AML-related activity only.
The Law Society described it as “particularly inappropriate to impose a levy on the legal sector to fund a regime which is not as effective as it could be for solicitors”, saying it was “strongly opposed” to removing the consent regime without a comprehensive overhaul of the existing principal money laundering offences.
“Removing consent would result in over-criminalisation of day-to-day business activities as a result of the ‘all crimes’ approach which treats minor, “technical” infractions the same way as ‘real’ money laundering.”