Law Society records 5.2 million surplus while predicting rises in practising fees

THREE-YEAR FORECAST: unavoidable extra tax charges set to hit cost of practice

The Law Society recorded a 5.2 million surplus - rather than the budgeted deficit of 1.6 million - in 2001, the Society's accounts have shown.

At the same time, projections for the next three financial years anticipate the practising certificate (PC) fee rising from 650 this year to 730 by 2005.

Treasurer Ken Byass told last week's council meeting that the Society's expenditure dropped slightly in 2001, when compared to 2000, to 64.4 million, mainly as a result of administrative savings at the Solicitors Compensation Fund, reduced depreciation, and a lower than anticipated spend on legal fees.

In addition, income increased to 69.7 million, primarily because of the 155 rise in the PC fee which took effect on 1 November 2001.

The three-year financial forecast predicted annual rises of around 4% in the PC fee: 675 in 2003, 700 in 2004, and 730 in 2005.

Around half of this comes from unavoidable extra tax charges.

Mr Byass said the budget predictions were 'based on the corporate plan and what we are doing now'.

The 2003 forecast included a 2.1 million deficit, which Mr Byass said the Society 'can stand'.

However, the finance and resources board voted last week in favour of the principle of a higher PC fee and no deficit.

As a rule of thumb, every 1 million raised by the Society puts 12 on the PC fee, said Mr Byass.

The Society's larger tax bill stems from the recent National Insurance hike, which will cost up to 300,000, and an additional 1 million of irrecoverable VAT.

This arises from a change in the formula used by Customs & Excise for calculating the proportion of input VAT the Society can recover on its non-business activities (all regulatory activity is classed as non-business).

l Mr Byass is to retire from the council this summer after 11 years representing Leicestershire, Northamptonshire and Rutland.

Neil Rose