Anti-Money Laundering Regulations 2019 – My Thoughts On HMRC’S Concession for VAs

Speaking with many Virtual Assistants online and at networking events, I’ve discovered that although many want to provide basic bookkeeping services to their clients, they have been unable to due to the anti-money laundering regulations HMRC introduced a few years ago.

Registration with HMRC under anti-money laundering regulations (AML) has been a requirement for ‘accountancy service providers’ for a long time – and of course, is very important for those providing professional accountancy and bookkeeping services as they are in a position where they can identify suspicious activity.

However, back in 2016, it came to my attention that there was a grey area over whether virtual assistants should be registered. Over the last two years, this has caused a lot of debate in VA groups across social media.

There’s been a lack of clarity from HMRC on AML regulations for virtual assistants

My personal view is that those of us who don’t specialise in these services should ensure that we understand the responsibility we have for reporting suspicious activity, however, if we are doing small amounts of financial admin for clients, like recording expenses, we shouldn’t really need to be registered with HMRC. The bulk of our work isn’t financial and so the main responsibility under AML should be checked by the clients’ accountant or bookkeeper as they are the ones providing the professional service here.

Interestingly, if we were employed (even on a part-time basis) by our client there would be no requirement for us to register, and as I recall from my employed days, there was many a time when I was involved in financial admin with no awareness of AML at all. In fact, I am more informed about it now than I ever was then and I don’t offer financial support to clients!

In late April (2019) we finally got a concession from HMRC for those that fall into the VA group (although this could cover more than just VAs). I appreciate that this concession has been made, and is due to the hard work of a few people alongside HMRC, but is it actually helpful for us?

Let’s break down what the AML update actually means for VAs

Firstly, take a read of all the information you need to know here –

My initial issue with the update is that HMRC is classing VAs as accountancy service providers.

Is this true?

I would argue not – I often see clients looking for a website, email marketing and social media support; with a small amount of invoicing or credit control included – does this mean the VA needs to be an accountancy service provider? I think not!

Is simply entering numbers into a spreadsheet to be sent on to a bookkeeper or accountant really providing a financial service?

Let’s move onto the exact points of the concession and remember that you have to fulfil each and every one of these to be exempt from registration:

  • virtual assistant is your main business
    Please, can we define what virtual assistant actually is then? I now call myself an online business consultant – can I apply for this concession or not? Given the vast remit that VA can cover I’m not sure how we can prove that we fulfil this to HMRC!
  • your annual business turnover is not more than £30,000
    Seriously! The average VA charges £30.00 per hour – so remembering this is turnover and not profit you can’t work for more than 1000 hours a year or 83.333 hours a month. As a part-time VA, you may manage this but if you are full time or have associates, I’m sure your turnover will easily be above this.
  • no more than 5% of your total business turnover applies to accountancy service activities
    In reality, this means just £1,500 per annum or at £30.00 per hour just 50 hours a year – less than 1 hour a week. Now don’t get me wrong, I don’t think that if the majority of your time is spent on this type of work you shouldn’t register, but if you have 2-3 clients and 5% of their work is this type, you will easily go over the set 5% so, again I don’t think this is realistic.
  • the accountancy services you provide support your main business
    Yes, I agree with this – most of us as VAs wouldn’t say that this is our main business and can probably prove it
  • there is no other business activity you need to register under Money Laundering Regulations
    It is unlikely you would have anything else that required you to register so you are fine here
  • your work is reviewed by an accountant or bookkeeper who is registered for money laundering supervision
    This is the point that has caused a lot of debate so far – should this be an independent professional paid for by the VA? Is the fact that the client uses an accountant or bookkeeper for their year-end sufficient? What exactly do these people need to be reviewing?

There is still so much ambiguity and I’m awaiting clarity on this from HMRC.

So my thoughts are that in practice this concession will apply to very few VAs, which therefore leaves us in the position of having to register for AML – which in itself isn’t cheap (approximately £600 for the first time, and that is if you only work from one premises and approximately £300 per year after that), or we just don’t offer this work and potentially lose clients over it.

As I said at the start, whether or not you should be registered, I still believe that as VAs we have a responsibility to do due diligence on our clients and to be aware of our AML responsibilities but would you register at these costs and could you afford to lose 1/3 of your bookkeeping income if you needed to?

I’m happy that HMRC have listened to what we’ve had to say about AML over recent years and are willing to make concessions, I just hope that they continue to take the time to listen, understand what we do and how we work to ensure that updates to AML actually work for us, and our clients.

Please note – if you are conducting any form of financial admin as a VA, or indeed working with a VA in this capacity you should take advice from HMRC as to whether or not you should be registered as you could be liable for a fine if you aren’t.

Update July 2019

I have been in contact with HMRC to discuss this further but they are sadly unwilling to consider any changes to this concession and all VA’s do need to meet all criteria to be exempt from registration, here is a screenshot of their email to me – I am disappointed with this but hope that one day HMRC will recognise us as the awesome professionals we are!

Screen shot of email from HMRC stating that they will not reconsider their position on the AML concession and that VAs must meet all criteria.