THE LEGAL industry reacted with surprise yesterday after Her Majesty’s Revenue & Customs (HMRC) announced a crackdown on tax dodging by London lawyers, with the aim of recovering up to £3m in missed payments.
“It is not, at present, clear to us exactly why the legal profession has been targeted by HMRC,” said Michael Todd, chairman of the Bar Council.
“The law is one of the UK’s strongest exports, and barristers and solicitors bring billions in revenue to the UK every year … The Bar Council expects barristers, like any other group of taxpayers, to meet their tax obligations.”
The capital’s barristers and solicitors are being targeted as part of a wider operation to recover as much as £19.5m from tax dodgers, with hair and beauty business in the north east and Scotland’s motor trade also facing scrutiny.
But accountants warned that because of the highly regulated nature of the legal industry, HMRC’s taskforce was unlikely to uncover large sums of money.
“HMRC’s previous similar crackdowns have been in relation to occupations where there are a significant amount of cash transactions,” said Tim Gregory at accountancy firm Saffery Champness. “Neither of these aspects are present to any great extent in the legal profession.”
Others claimed that the government would have been unlikely to launch such action without good cause.
“This approach has been used by HMRC for some time now and is considered highly effective,” said RSM Tenon’s Gary Ashford. “The latest target of London lawyers is likely to be highly controversial, but this is serious and some are bound to result in tax investigations, even including criminal actions.”
Todd, meanwhile, added that the Council had been in touch with exchequer secretary David Gauke MP to discuss potential issues surrounding barristers’ tax liabilities, but that he had declined to meet them, and that yesterday’s announcement that HMRC had specific concerns relating to lawyers had come as a surprise.