FRAUD: Lady Justice Butler-Sloss is set to offer guidance

Requirements for divorce lawyers to report clients they suspect of not paying income tax to the National Criminal Intelligence Service (NCIS) need additional guidance, may impinge on practice and breach the Human Rights Act, lawyers said this week.

Since the introduction of the Proceeds of Crime Act 2002 (POCA), solicitors have been required to report suspicions of a wider class of suspected crimes to NCIS - with tax evasion among them.

But this poses specific problems for family lawyers.

Marilyn Stowe, the chief assessor to the Law Society's family law panel, said: 'This might be particularly problematic in cases where a solicitor acting for one spouse on a divorce becomes aware that assets held by the other spouse - which could be used in settlement - may have been subject to tax evasion.

If NCIS then give consent to the settlement to what extent can this be relied on?'

Philip Way, the chairman of the Solicitors Family Law Association's Proceeds of Crime Act working party, said: 'Everybody is extremely nervous and adopting a very cautious approach.

This has the potential seriously to affect practice.'

He said that a High Court case called Re P - currently being considered by the president of the family division, Lady Justice Butler-Sloss - is expected to give guidance on family lawyers' obligations to discuss suspicions of tax evasion with NCIS or the other side's solicitor in divorce cases.

The Law Society's money laundering working party will hold a special meeting later this month to deal with POCA issues affecting family lawyers.

Jeremy Fleming