At the start of this year, the Bar Standards Board (BSB) began accepting applications from barristers wishing to set up new BSB-regulated businesses, or entities, offering reserved legal activities, including appearing in court as an advocate. The changes mean that barristers will be able to form companies, partnerships or limited liability partnerships (LLPs), with the BSB due to start authorising applications from April.
As a Barrister, until now, your self-employed status has meant you have had to accept a potentially higher tax burden, compared to other professionals. However, the BSB regulations will no longer restrict Barristers to having to trade as ‘self-employed’. The new entities can either be Barrister Only Entities (BOE) and/or Alternative Business Structures (ABS).
Trading through a company or LLP also offers the further benefit of ‘limited liability’ status.
If you do decide to move to a limited company structure, the timing of the decision to change your business status from being self-employed to trading via a limited company is important. Corporation tax is generally not payable until 21 months after incorporation but at the point of ceasing as a self-employed Barrister, cessation accounts must be prepared. Deregistration for VAT will be required and an application to join the Barristers’ deferment scheme will also be needed.
David Jacobs, General Practice Partner at Milsted Langdon, who specialises in advising members of the Bar said: “We have been waiting a long time for the Barrister profession to be given the freedom to arrange their tax affairs in the same way as other professionals. However, the decision to switch to one of the new BSB-regulated businesses should only be made after taking proper advice.”
You may be considering the options for a more flexible business structure and Milsted Langdon can provide expert advice on the different tax environments and other issues involved in operating as a company, partnership, or LLP.
Milsted Langdon – which has offices in Bath, Bristol, London, Taunton and Yeovil – can also provide comprehensive support with your application to Bar Standards Board (BSB) and take care of the incorporation process. The firm can also advise on remuneration planning, run your company payroll, deregister you as an individual and register the company for VAT, as well as dealing with the company’s ongoing tax and accounting compliance issues.
For more detailed advice on operating through a limited company, partnership or LLP structure, or to arrange a free, no obligation meeting, please contact us.