The taxman cometh…

…and even an assessment error could result in unwanted attention

Q: What do Welsh grocers, Geordie beauty therapists, the Scottish motor trade and London lawyers have in common?

A: The taxman is on their backs.

Accountants are painting a mixed picture of plans unveiled by HM Revenue & Customs (HMRC) to launch a taskforce to chase down tax-dodging lawyers, with some suggesting there will be little monetary gain in it.

Even HMRC appears to be aiming for a distinctly underwhelming figure of £3m in owed tax from 300 high-risk cases.

But with two barristers already before the courts, investigators are showing they are determined to prosecute the prosecutors.

Sources suggest those who fear the rap of the taxman’s knuckles on the front door of their country piles are more likely to have made self-assessment errors than be engaged in skullduggery.

The issue for barristers is that a decade ago they would only paying tax on fees paid – which could be years after the work was done.


That has changed and barristers must now pay tax on work-in-progress (WIP). With clients and even instructing solicitor firms hard-up, that can be a slow process, leaving barristers paying tax on fees they have not received.

One barrister who has knowledge of HMRC investigations said lawyers at odds with the system will be a mix of those who have got into serious financial difficulty and those who have been taking advantage of classic self-employed allowances. Some may even be engaged in sophisticated tax avoidance loophole schemes.

But very few, he believes, will have taken the career-ending risk of cheating the public purse.

Of course, this may just be the profession defending its own – a bit like accountants lining up to urge under-scrutiny lawyers to seek their advice.

In January, Rohan Pershad QC, formerly of 39 Essex Street, and Ed Agbaje, who has been suspended from 1 Gray’s Inn, will face trials on VAT fraud charges they deny.

This is not the end for the taxman. Get your finances in order.