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28 Aug 2008
A group of about five City law firms have teamed together for advice from Deloitte on HM Revenue and Customs (HMRC)’s clamp down on tax relief for costs relating to equity partner hires and has also instructed a leading tax counsel to write to HMRC while many others are taking advice from accounting firms individually.
More than half of the UK top 50 law firms, including many of the top 10 city firms, are understood to be negotiating with HMRC, legalweek.com reports.
Some law firms, particularly US law firms in London, rely heavily on recruiting which can cost more than £100,000 per partner hire in the City as recruiters charge up to 20% of a lateral’s annual pay, making the HMRC approach a heavy blow to handle.
‘HMRC’s current stance is that such fees are not deductible against tax. We and most other advisers believe there is at least a case to answer to say that they could be tax deductible,’ a Deloitte spokesperson said.
Further reading:
Qualified advice preferred option to IR35 probe
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