Litigation firms to discuss tactics for tax reforms fight

LARGE litigation firms waging a campaign against proposed changes to the taxation of professional businesses will meet in private this week to draw up a plan of action.

The firms aim to lobby the Inland Revenue over its plan to tax professional partnerships on work as it is done, rather than when payments are received.

At a closed meeting held in the Law Society's Chancery Lane headquarters last week, 22 lawyers from 15 major firms elected a steering committee.

Law Society president Phillip Sycamore, who is seeking a meeting with Treasury secretary Dawn Primarolo as part of the Law Society's campaign against the changes, also attended.

Matthew Beard, marketing manager at Russell Jones & Walker, which spearheaded the campaign, said last week's meeting was 'positive and constructive' although there was 'some differing of opinion'.

The proposed changes will hit litigation firms hardest as they are paid at the end of the case, which can mean a wait of several years, whereas commercial firms can count on more regular payments.

The group intends to draft a statement upon which to base its lobbying action, and work out an agenda for the campaign at a meeting on Monday this week.

The Inland Revenue has given opponents of the plan until 14 February to comment.

The plan could mean a tax hike for partners in regional firms of up to £20,000 for the years 2000 to 2003, and about £30,000 for partners in metropolitan firms. Sole-trader barristers could face a hike of 50 per cent in their tax bill.

Although extra payments will not be due until 31 January 2000, under the proposals they are due to be included in the next finance bill and will be effective from 5 April this year.

Firms could also be forced to install costly computerised time-keeping systems, and joining and leaving partnerships will become more complex.

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