City tax lawyers have dismissed as unworkable a parliamentary motion urging the government to clamp down on firms that design tax avoidance schemes.

Thirty-two MPs have so far signed an early day motion urging the government to ‘investigate and regulate’ the activities of banks, law firms and accountancy firms in ‘devising, marketing, promoting, implementing but then concealing aggressive tax avoidance schemes’.

The motion, proposed by Labour veteran Austin Mitchell, alleges that these schemes are ‘designed to deprive the Treasury of billions of pounds of tax revenues which in turn forces the government to curtail social investment and shift the tax burden on to ordinary individuals’.

Vimal Tilakapala, a partner in the corporate tax department at magic circle firm Allen & Overy, which is top-ranked for corporate tax, said: ‘There are serious confidentiality issues if the government expects us to police our clients, and there are already extensive disclosure rules whereby lawyers have to inform the Revenue of certain avoidance schemes. It’s incredibly difficult to ask lawyers to make judgements on what the government regards as avoidance. It is a political issue, not a legal issue.’

Stephen Edge, a tax partner at magic circle firm Slaughter and May, also top-ranked for corporate tax, said: ‘Law firms don’t market tax schemes in the way accountancy firms do. Law firms advise clients on the law when they are asked to do so. If you put a load of bright bankers in the same place, they will make sure tax doesn’t get in the way of a financial transaction. But you can reach the stage where tax is the lead matter on a transaction, rather than a supporting factor.’

The Finance Act 2004 requires law firms to disclose certain types of tax avoidance schemes.