Small firms should not escape paying the new levy to fight money laundering - because they may pose a higher risk than larger practices, the Solicitors Regulation Authority has proposed. In a response, published this week, to the government's plan to collect £100m a year from professional services firms to fight economic crime, the regulator agrees with the government that the levy 'should be charged on a risk-based approach'.

The charge should be based on turnover or revenue, the SRA states, ideally only of activity that is in scope. Disagreeing with the Law Society's suggestion that charges be based on the number of suspicious activity reports, the SRA says 'this would be particularly problematic as it could encourage firms to submit fewer reports to reduce their levy liability'.

The levy, announced by the chancellor last March, is expected to be introduced next year. It is strongly opposed by the Law Society, which has described it as an additional tax on the profession. 

According to the SRA's submission, the regulator supervises 24,730 beneficial owners, officers and managers across 6,593 firms potentially liable to the levy. It notes that a firm's risk profile depends on its work area, the location and type of its clients and how well the firm mitigates its risk. 'Any of these risk factors can apply to smaller firms, and in addition small firms may have fewer resources for compliance control systems to mitigate their risk,' the response states. 'For these reasons it would be contrary to a risk-based approach to exempt small firms from contributing to the levy, and could result in larger firms paying disproportionately higher fees.'