Compliance

UK Goes After Lawyers As Part Of Tax Dodging Crackdown

Tom Burroughes Group Editor London 19 September 2012

UK Goes After Lawyers As Part Of Tax Dodging Crackdown

The UK tax authority has launched a tax evasion crackdown on a profession that sometimes assists wealthy individuals in structuring affairs to minimise tax – lawyers.

HM Revenue & Customs said today it has set up taskforces, including one aimed at the legal profession. In total, the taskforces are expected to recover more than £19.5 million ($31.7 million) from tax evaders.

When asked by WealthBriefing whether that relatively modest sum of expected recoverable money as mentioned in a statement was accurate, a spokesperson for HMRC said it was correct.

Besides lawyers, other groups being targeted are grocers and retailers; people working in the hair and beauty sector; restaurants, and the motor trade.

“We have made it clear that we will not tolerate tax evasion and we are determined to crack down on the minority who choose to break the rules. Everyone needs to pay the taxes they owe in full. It is not fair that at a time when most hard-working people are paying the right tax, others are trying to get out of paying what they should,” David Gauke, exchequer secretary, said in a statement.

HMRC has launched 30 taskforces since May 2011.

The government said it is spending £917 million to foil tax evasion, avoidance and fraud from 2011/12, aiming to raise an additional £7 billion each year by 2014/15.

“HMRC’s previous similar crackdowns have been in relation to occupations where there are a significant amount of cash transactions and/or elements of work that are routinely dealt with outside normal accounting systems. Both of these aspects allow an opportunity to conceal income and so evade tax. Neither of these aspects are present to any great extent in the legal profession, and it is difficult to see how HMRC expect to recover significant amounts of tax,” Tim Gregory, partner at accountancy firm Saffery Champness, said.

“Lawyers are professionals, regulated tightly by their professional bodies, and a conviction for tax fraud would put an end to their careers. Whilst every walk of life has its bad eggs, only an exceptionally unusual lawyer would risk their livelihood by cheating the system, so it seems unlikely that there can be many for HMRC to investigate,” he added.

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