Barristers: Are Your Tax Affairs in Order?

During September last year, it was announced that HMRC will be launching a taskforce to target the legal profession, including barristers.

The taskforce aimed at targeting the legal profession is part of a nationwide operation by the taxman, who is looking to recover over £19 million from a number of trades throughout the country.
Following the original announcement by HMRC that they would be targeting barristers, members of the BAR council met with senior HMRC officials to outline their concerns.

In return, HMRC have supplied the Bar council with a list identifying the following common errors which they will be cracking down on; and these errors made by barristers include failure to change from the income tax cash basis to the earnings basis at the correct time and the incorrect calculation of earnings due to mistakes in the assessment of work in progress and completed but unbilled work – recognition of debts, calculation of completed work (UITF40) etc.

Other common errors which HMRC will be cracking down on include failure to make returns (both VAT and income tax self-assessment); failure to pay tax – including VAT – when it is due; continuing to charge VAT under a deregistered VAT number (the VAT number is often deregistered due to the individual failing to make returns); and the omission of ancillary income from returns such as income from property or authorship.

However, although HMRC have launched their crackdown on barristers and those within the legal profession, anyone who is aware that they are not in compliance with their taxation obligations should contact HMRC who will have to, by law, take into account that the admission was voluntary when considering a penalty.

Barristers and legal professionals who are concerned about the crackdown, or who wish to discuss their taxation situation and finances, can also come and speak to myself and the team at Milsted Langdon, who are on hand to offer tailored advice, support and guidance.

As an accountant; David Jacobs offers a range of accounting, audit and taxation advice to the legal and medical professions.

Posted in News.