Flurry of HMRC Interventions for the Art Market – Are You Prepared?

The FCS Hotline has been on fire!  It seems HMRC have been targeting art market participants (AMPs) requesting dates to conduct in person or virtual Interventions.  What HMRC terms an “intervention” feels to many AMPs much more like an audit.  Even to those with a solid anti-money laundering (AML) programme, the possibility of HMRC combing through their internal AML documents is daunting to say the least.

What can AMPs expect during a HMRC intervention?

To begin the Intervention or audit, HMRC routinely asks the AMP to send copies of key documents such as:

• the most recent annual written risk assessment
• the written AML policy, controls and procedures
• a list of relevant transactions.

These documents are then reviewed by the HMRC agent in advance and in preparation for the intervention meeting, whether this be virtual or in person.

While many AMPs have lovely looking documents, these are not being read, understood, or used in practice.  In some cases, participants rely on generic downloaded templates, reuse outdated documents with minimal changes, or have simply failed to produce the necessary Risk Assessments, Policies, or Procedures tailored to their business.

For this reason, one of the key stated purposes of an Intervention is for HMRC to “test and challenge” whether the AMP understands the risks of their business, as well as their AML compliance obligations.

How can an AMP prepare for a HMRC Intervention?

To survive the Intervention process unscathed, preparation is key. It is advisable to be fully prepared to answer HMRC’s many questions.   For example, it is important to ensure your Nominated Officer truly understands and is able to answer confidentiality questions about your AML Program, including specific answers in your Risk Assessment, the content of your AML Policy, how you implement your policy and generally the risks facing your business.

What is the process of a HMRC Intervention?

The Intervention process  carried out by HMRC is fairly standard, from the first phone call or email to the final concluding letter. The process from beginning to end typically takes approximately two months. However, it may take significantly  longer if HMRC decide to return to continue the audit at a later date. Some audits have remained open for more than a year. 

The format of the meeting itself is structured, from introduction to conclusion. To assist HMRC in gaining insight on the level of the AMP’s understanding, HMRC starts the meeting by asking questions about a variety of topics. The meetings themselves range from a couple of hours to two days.

The topics covered may be more general, such as a high level explanation of how the business operates to the very specific such as reviewing individual due diligence records on qualifying transactions. The Interventions cover not only policy but process. For example, HMRC may enquire how an AMP would handle a red flag.

What to do next?

Preparing for an HMRC Intervention doesn’t need to be overwhelming — but it does require genuine understanding and proper implementation of your AML obligations.  Whether you’re confident in your documentation or unsure where to begin, it pays to be proactive.

If you would like support reviewing your AML framework or preparing for an Intervention, our team of experts is here to help.