London lawyers are the target of a crackdown on tax evasion expected to yield £3m launched today by HM Revenue & Customs.
The Capital’s legal profession is one of five ‘high-risk’ trade sectors that will come under the scrutiny of specialist tax inspectors, HMRC said. Teams will target the 300 highest-risk cases and visit firms to examine records and carry out other investigations.
The other sectors targeted in the initiative are grocery and retail in South and North Wales, the north-west and the south-west; hair and beauty in the north-east; restaurants in the south-east and Solent; and the motor trade in Scotland. In total HMRC said it expects to recover £19.5m from ‘tax dodgers’.
The taskforces are a result of the government’s £917m spending review investment to tackle tax evasion, avoidance and fraud from 2011/12. It aims to raise an additional £7bn each year by 2014/15. Since May 2011 HMRC has set up 30 taskforces; the first aimed at the restaurant trade.
David Gauke, the exchequer secretary, said: ‘We have made it clear that we will not tolerate tax evasion and we are determined to crack down on the minority who choose to break the rules.’
He said: ‘It is not fair that at a time when most hard-working people are paying the right tax, others are trying to get out of paying what they should.’
A Law Society spokesman said: ‘HMRC have a responsibility to collect all taxes that are due, in the legal sector as elsewhere. We welcome their commitment to conduct individual investigations sensitively and in confidence until complete.’
Bar leader Michael Todd QC said that the Bar Council expects barristers to meet their tax obligations, but said it is not clear exactly why the legal profession has been targeted. ‘Barristers provide an essential, frontline public service which is crucial to the smooth running of our country’s excellent and world-renowned justice system. The law is one of the UK’s strongest exports, and barristers and solicitors bring billions in revenue to the UK every year.’
Todd said that his predecessor Peter Lodder QC wrote to Gauke last December to invite him to discuss barristers’ liability to pay taxes for work that has been done, but for which the fees had not been paid by the government.
‘He declined to meet us, and we were unaware, until yesterday, that HMRC had specific concerns about the tax affairs of lawyers,’ said Todd.
He added: ‘We are concerned that HMRC has chosen to proceed in this manner, rather than using the channels of communication with the relevant professional bodies, which have always been open.’