Taxing times

The Inland Revenue: full of tax lawyers? Absolutely not, says its chief solicitor Philip Ridd. Steve Hoare investigates

Tax penetrates everything,” says the solicitor of Inland Revenue Philip Ridd. Don’t we just know it. Taxes can make a serious dent in the six-figure salary of your average City lawyer, but it is the all-encompassing nature of the work that keeps the 90 lawyers of Ridd’s department happy, despite commanding salaries well below those of average City lawyers.

Ridd has been with the Inland Revenue for the best part of 32 years. He spent a two-year spell as head of litigation at the Treasury Solicitor’s Department between 1993 and 1995, and he was solicitor to the Bloody Sunday Inquiry from the beginning of 1998 to the spring of 1999. Following the conclusion of the inquiry, Ridd snared the top legal job at the Inland Revenue in September 1999.

“We’re thought of as tax lawyers, and obviously, working for the Inland Revenue, to some extent that’s true – but it isn’t entirely,” says Ridd. He manages an office of around 270 staff, of which 90 are lawyers. He describes his team as a multidisciplinary practice. Unsurprisingly, it includes accountants, but the majority of staff are paralegals and support workers. The litigation function in particular requires a great deal of support.

The Inland Revenue is a non-ministerial department with some responsibility to the Treasury, which is overseen by the Board of the Inland Revenue. Ridd’s job is running the legal office and advising the board. “This isn’t just advice on fine points of law, but joining in the debate on what the department should do and how it should deal with situations – what’s known as the general counsel role nowadays,” he explains.

The Inland Revenue is part of the Government Legal Service, which is a loose configuration of all the various legal offices headed by the Treasury Solicitor. While Ridd does liaise with the Treasury Solicitor and other Government departments, he reports to Sir Nicholas Montagu, the chairman of the board.

Ridd’s office provides legal advice to the 74,000 staff of the Inland Revenue, who can be a pretty demanding bunch. “We have a department full of qualified tax experts, who are brilliant. We have frighteningly expert clients,” explains Ridd, unintentionally putting the fear of God into a thousand sole practitioners.

The office’s enquiries are extremely diverse. “You have the tax provisions themselves and what they mean and how they’re applied, but they’ve got to apply to some factual situation,” says Ridd. That may involve a simple set of facts, but it may also involve questions of general law, such as planning, divorce law, company law or trust law. “The inspectors and the other expert staff have a lot of training, but they aren’t company lawyers,” says Ridd.

A brief look at Ridd’s organisation chart shows a dizzying maze of departments, but they can be simplified thus. First is a tax department, which contains people who advise and handle the litigation that relates to the running of the tax system as it is today.

Next is a legislation group. “These are the forward-looking people who are engaged in helping with changes to the tax law,” says Ridd. They contribute to the finance bill, which comes every year following the budget. They also advise policy people in relation to proposals for changes in tax law. The policy people then speak to ministers about the changes. The Office of Parliamentary Counsel in Whitehall writes primary legislation, but secondary legislation is written by departmental lawyers. Ridd has nine lawyers advising on the budget and drafting secondary legislation.

The next team is the general legal services group, which – unsurprisingly given the name

– covers a number of bases. It covers the prosecution of people who are evading taxes and advises the Valuation Office, part of the Inland Revenue, which values property for business rates and council tax.

The general legal services group also has a large bankruptcy practice for people who have not or cannot pay their taxes. “When

you’ve gone through a lot of procedures and they still can’t or won’t pay, then bankruptcy proceedings are taken against them. It’s a standard debt management process that other companies use when their debtors won’t pay. We have 45 non-lawyers doing all the standard bankruptcy proceedings. Then we have lawyers who’ll deal with the more complex cases,” explains Ridd.

The fourth part of general legal services covers internal issues, a large percentage of which is employment law. “The Inland Revenue has 74,000 staff who aren’t always happy. When I was young there was almost no employment law. Nowadays it’s big stuff,” says Ridd.

Between them, these groups keep the majority of work in-house. There are just two things that are outsourced, one of which is the conveyancing work that needs to be done on the Inland Revenue’s many offices.

“We’re not property or commercial leasing lawyers. That work is out with a couple of firms that won a tender some years ago: Beachcroft Wansbroughs in Manchester and Pinsents in Birmingham,” says Ridd.

Large procurement projects are also outsourced. EDS runs the IT systems and is involved in a retendering exercise to win the new contract. Outsourcing specialist Shaw Pittman, led by London managing partner Alistair Maughan, is advising the Inland Revenue. “We don’t have the expertise to do that sort of thing, so we don’t,” states Ridd.

Ridd has seen some big changes over the past 32 years. Europe is a bugbear: the European courts have been addressing the issue of corporation tax. “There are problems. We’ve lost some cases and the corporation tax yield is dodgy at the moment, partly because the European court has declared a number of tax provisions to be anti-European,” he says.

The Inland Revenue has a much wider remit than it once had. It is responsible for enforcing the national minimum wage and for the tax credit regime, which means that the taxman is even giving money out nowadays.

The current Government’s penchant for rejigging departments also promises to keep Ridd on his toes. “There’s always been a question of whether Customs & Excise and the Inland Revenue should be combined,” he explains. The O’Donnell Review, led by Permanent Secretary of the Treasury Gus O’Donnell, is studying the relationship between the Treasury, the Inland Revenue and Customs. He is aiming to make recommendations to the Chancellor of the Exchequer in November, which some observers believe will see the departments merged.

Ridd has his doubts, but whatever the result, he is sure to be kept engaged in an evolving environment.
Philip Ridd
The solicitor of Inland Revenue
The Inland Revenue

Statistics
Organisation The Inland Revenue
Sector Government
Employees 74,000
Legal capability 90 lawyers (270 staff)
The solicitor of Inland Revenue Philip Ridd
Reporting to Chairman Sir Nicholas Montagu
Main law firms Beachcroft Wansbroughs, Pinsents and Shaw Pittman