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HBF Member Briefing - HMRC Anti-Money Laundering Supervision for Estate Agents

Date: 24/07/14

HMRC Anti-Money Laundering Supervision for Estate Agents

HMRC have recently taken over responsibility for anti-money laundering supervision of estate agency businesses and have issued guidance which is available on the HBF web site.

Whilst the core business of house builders (selling homes that are built on land they own) are not covered by this guidance, there may be instances when house builders are considered to be carrying on an estate agency business and must therefore register with HMRC for anti-money laundering supervision purposes.

The definition of an estate agency business is contained within section 1 of the Estate Agents Act 1979 but typically house builders will be caught where they

“effect the introduction to the client of a third party who wishes to acquire an interest in land”

This definition would include effecting an introduction on a property that a builder has agreed to take in part-exchange before the property is owned by the builder.

Members should take legal advice if they are uncertain whether they fall within the definition of an estate agency business. 

Dual Supervision by HMRC and the FCA

Some HBF members, typically those that offer second charge mortgages, may already be subject to anti-money laundering supervision by the Financial Conduct Authority (FCA).

HBF have held discussions with HMRC and stressed the importance of ensuring where possible a single supervisor for anti-money laundering regulations and, whilst HMRC cannot give an absolute assurance that house builders will not be subject to two supervision regimes, they have agreed that house builders who might be caught by both HMRC and the FCA can approach HMRC who will attempt to agree with the FCA which organisation will carry out the anti-money laundering supervision.

Joint Ventures and Build Licence Arrangements

HBF are aware that under certain JV agreements and build licenses, house builders will be selling properties in which a third party has an interest in the land and this third party interest may cause the house builder to be considered as operating an estate agency business.

HMRC did not feel able to issue general guidance as to the circumstances in which  JV’s or build licences would be caught but did agree to consider each case on its merits. House builders may thus seek clearance from HMRC (see contact details below) that specific JV’s or build licences do not mean that the house builder is operating an estate agency business.

HMRC contact Brian Garcia

Michael Powell
Finance Director