The Commons justice committee last week exercised its power to demand answers from the government on compensation for solicitors affected by the Legal Aid Agency cyber attack.
MPs want answers after concerns were raised about the clarity, adequacy and longer-term consequences of emergency funding arrangements in submissions to the committee’s access to justice inquiry.
In a letter to legal aid minister Sarah Sackman, chair Andy Slaughter said: ‘Providers across the civil, family and criminal legal aid sectors have described significant uncertainty as to the legal and financial status of the contingency payments, including whether such payments should be treated as loans, advances or grants, and therefore how much VAT is owed on them.
‘The committee has also heard consistent evidence of the substantial additional administrative burden placed on providers. This includes preparing paper applications, tracking cases outside digital systems, repeatedly reviewing updated guidance, and maintaining parallel records in anticipation of later reconciliation. Providers report that this work remains wholly unremunerated.’
Sackman is asked to urgently consult with HM Revenue & Customs on a definitive statement on the status of contingency payments and how they should be treated for tax purposes.
The committee also wants to know what assessment has been made on the additional billable casework time caused by the attack and whether a compensation scheme will be set up for additional time spent on non-casework, non-billable processes.
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